Polymarket's Oct. 31 blockade-end contract fell to 8.5 cents and the Dec. 31 contract to 35.95 cents, as Iran's foreign minister said the Strait of Hormuz would not be open to everyone without an agreement. The "No Hormuz Agreement" outcome for Friday rose to 94.25 cents, its high for the window.
Prediction markets that rallied on Tuesday's reports of a mediation proposal have given back all or most of the move.
By 4:46 a.m. Eastern on Wednesday, Polymarket's contract on a U.S. announcement ending the naval blockade of Iran by Oct. 31 was down to 8.5 cents, 2 points and 19% below its early-Tuesday-afternoon level of 10.5 cents. That is below the 9.5 cents at which it opened Tuesday, before the reports circulated. Its year-end twin slid from 39.1 cents to 35.95 cents, which leaves it above the 34.45 cents where it began Tuesday: about two-thirds of the day's 4.65-cent gain has gone.
Friday's Hormuz contract, which settles on an announced U.S.-Iran deal covering shipping through the strait by Oct. 23, pointed the same way. Its "No Hormuz Agreement" leg climbed from 90.95 cents to 94.25 cents, the top of its overnight range, which leaves roughly 5.75 cents across the deal outcomes.
What changed since Tuesday afternoon
Several developments pointed toward escalation, and the decline was gradual rather than a single break, so no one of them can be credited with the move.
Iranian Foreign Minister Abbas Araghchi said the strait would not reopen to everyone until an agreement is reached. On Tuesday afternoon, Iran's Revolutionary Guards said three tankers had struck mines south of the strait, two of them set ablaze and a third exploding. Those claims have not been independently confirmed; the latest relevant incident report from the United Kingdom Maritime Trade Operations center described only a tanker's "interaction" with military forces far to the south, off Oman. A Saudi-led coalition said it intercepted drones over Medina and the kingdom's Eastern region. And two U.S. officials were reported as saying a third U.S. aircraft carrier group is heading to the region.
Oil moved in the same direction. Brent crude was at $109.64 at 8:22 p.m. Eastern and topped $110 overnight.
Separating this month from this year
The more useful number is the gap between the two blockade contracts, which isolates the market's bet on an announcement in November or December. Early Tuesday afternoon that slice was worth 28.6 cents. On Wednesday morning it was 27.45 cents.
The October bet lost about a fifth of its value; the November-December slice lost about a cent. Traders are pricing out an announcement this month much faster than they are pricing out one this year.
Depth is modest but not trivial: as of Tuesday afternoon, about $180,000 had changed hands in the October contract over 24 hours, and roughly $131,000 of resting orders sat in the year-end book. Both figures have risen since. These are prices traders will pay, not forecasts, and the news that moved them consists largely of claims made by parties to the conflict.
How to read the split
If traders have it right, headline risk and the diplomatic calendar are now priced separately: almost nothing is left on October, while a mid-30s price for year-end still leaves room for mediation to deliver later.
If they have it wrong, the error is in the year-end leg. Tehran's published conditions, fresh escalation claims and more U.S. ships heading to the region all describe a confrontation that lasts longer than December.
What to watch
Next tests: a statement from Washington or Tehran accepting a framework; independent confirmation or denial of the tanker claims; the Friday deadline on the Hormuz contract; the gap between the October and December contracts; and Brent. A November-December slice that falls below 25 cents would show traders losing faith in this year's mediation, not just this month's.