President Donald Trump made an announcement on Sunday, Aug. 2, stating he called off a major military strike against Iran due to an impending agreement regarding its nuclear program and the Strait of Hormuz.
The President's announcement triggered a massive reaction, leading to a decline in oil prices and notable activity within Iran-related contracts on Polymarket.
Meanwhile, Tehran expressed reservations regarding the optimistic view of the ongoing negotiations, as the military tensions and the naval blockade continue.
What can be expected in the near future?
Trump’s Announcement: No Strikes, Deal on the Way
Although initial news reports indicated that the United States and Israel were gearing up to strike Iran's energy infrastructure over the weekend, President Trump later clarified the situation.
On social media late Saturday, he disclosed that Iran, alongside other Middle Eastern nations, had asked the U.S. to pause any military action.
According to Trump, this delay was granted because the foundational parameters of a new agreement had already been established.
In a Truth Social post published Saturday night, the President declared that while the U.S. remains "locked and loaded and ready to go against the Islamic Republic of Iran," he ultimately chose to "cancel the attack" following requests from Tehran and neighboring nations.
He noted that this cancellation is contingent upon the ability "to rapidly make a DEAL" and emphasized that Israel was also included in the commitment.
Trump said the deal would include the immediate opening of the Strait of Hormuz and an end to Iran's nuclear threat.
At the same time, Secretary of War Pete Hegseth maintained that U.S. troops continue to be on alert and fully prepared for action, demonstrating that military readiness remains unaffected by President Trump's choice to postpone the strike on Iran.
The Market’s Reaction
Oil prices fell more than $5 a barrel after President Trump delayed a planned strike on Iran to allow time for talks aimed at ending Tehran's nuclear program and reopening the Strait of Hormuz to commercial tankers.
According to Reuters, Brent crude futures fell $5.52, or 6.28%, to $82.41 a barrel as of 2202 GMT, while U.S. West Texas Intermediate crude dropped $5.27, or 6.22%, to $79.40 a barrel.
The Presidential announcement also resonated across prediction markets. Polymarket saw an influx of trading volume alongside significant shifts in sentiment across various contracts tied to Iran's future.
The Ceasefire Odds
The “US x Iran Effective Ceasefire by…?” contract clearly reflects the market’s sentiment toward Trump’s words. The board has several brackets with dates, and each position has experienced a surge in their "Yes" shares.
Currently, the Aug. 31 option trades at a 77% implied chance, with the Aug. 14 position following at a 68% chance, which translates to a growth of 12% on the latter’s "Yes" shares.
Consider that just 10 days ago, the position with the highest implied probability was trading at 55%.
While negotiations seem to be underway, the value of those "Yes" shares might have reached its ceiling, at least for now.
Buying discounted contrarian shares on positions like Aug. 14 and Aug. 31 can be profitable if the so-called “imminent deal” falls through or is delayed once again.
The Future of the Hormuz Strait
While expectations for a ceasefire remain relatively positive, the market thinks that a total reopening of the Strait of Hormuz is highly unlikely.
Right now, the “Strait of Hormuz traffic returns to normal by…?” contract on Polymarket indicates a decline in positive expectations. Traders believe that there's only a 14% chance that the naval blockade is lifted before Aug. 31.
The odds of a total reopening by Sept. 30 are barely better, trading at just 25%.
This skepticism is directly related to the conflicting words from the authorities of both countries.
While the U.S. President claims that talks with Iran are ongoing, a Tehran official said on Monday that Iran’s only negotiations are with Oman.
The two states have had "constructive discussions" over the past week on a new, temporary route through the Strait of Hormuz.
When asked whether Iran will be willing to “return to fully free navigation” in the Strait of Hormuz, Trump said he's not going to let Iran impose fees.
At the same time, U.S. Central Command (CENTCOM) reports that it continues to strictly enforce the naval blockade against Iran. Since the measure was reinstated in mid-July, CENTCOM has redirected 44 commercial ships traveling through the Strait of Hormuz.
Sunday’s figures shared by CENTCOM listed 35 redirections, two disabled vessels and two boarded ships, meaning it redirected nine vessels over the past 24 hours.
