US and Iran pause military actions for third night amid diplomatic efforts

The United States and Iran have refrained from military actions for a third consecutive night, as diplomatic efforts are reportedly being given room to progress. This pause follows a period of heightened military activity, with the U.S. conducting 13 consecutive nights of strikes against Iranian targets. These actions were aimed at reducing Iran’s capability to threaten commercial shipping in the strategic Strait of Hormuz. The current cessation of hostilities comes amid ongoing negotiations, although the broader conflict over the strait remains unresolved. The market for a potential U.S. announcement ending the Iranian blockade by July 31 has seen a decline, now priced at 11.5% YES, down from 22% just a day ago. Meanwhile, the probability for the blockade ending by August 31 remains more optimistic, with a current pricing of 48.5% YES, despite a recent drop from 60%. It appears that market participants are interpreting the current diplomatic pause as potentially conducive to resolution, though the uncertainty of the situation keeps the probability of a near-term resolution lower. The background of these developments includes the ongoing U.S.–Iran conflict centered on the Strait of...