Middle East Hostilities Are Ongoing

Market Commentary – April 20, 2026

As of last Friday, the situation in the Middle East showed tentative signs of de-escalation, with Iran announcing that the Strait of Hormuz was “completely open” to commercial shipping for the remainder of the current ceasefire, set to expire around April 22.

However, developments over the weekend have reversed much of that progress. The Islamic Revolutionary Guard Corps (IRGC) reimposed strict control over the Strait, citing the ongoing U.S. naval blockade of Iranian ports and coastal areas. Iranian gunboats fired on at least one Indian flagged tanker (and forced others to turn back) despite prior assurances of safe passage. Meanwhile, internal regime divisions—particularly between IRGC hardliners and more pragmatic political/diplomatic factions—have contributed to the mixed signals and abrupt policy shifts. The U.S. has maintained its full blockade and signaled plans to board or seize Iran-linked vessels anywhere in the world in the coming days. And that’s exactly what the U.S. Navy did yesterday (Sunday), taking control of an Iranian cargo ship that tried to run its blockade in the Strait.

Probability markets (primarily Polymarket and Kalshi) now reflect heightened caution amid the renewed Hormuz disruptions. Traders assign roughly 63%-71% odds that the ceasefire will be extended beyond April 22 (with April 21 as the leading short-term date), while the chance of a U.S. blockade lift by April 30 has fallen sharply. Markets price only a modest 40% likelihood of Strait traffic returning to normal by end of May, rising to around 69%-82% by end of June. A full, near-term permanent peace agreement remains low-probability (20-40% by late April/early May windows), with traders favoring a longer timeline (June 30 at ~68%) as talks resume in Pakistan.

Oil Sold Off Sharply On The Opening Of the Strait of Hormuz, But…

With the announcement that the Strait of Hormuz was open, crude oil prices fell sharply (down 11%), but over the weekend Iran blocked the Strait once more, putting upward pressure on oil again. Technically there is good support for WTI crude oil near $80 and resistance is $90. The futures market is pricing in that oil prices will fall to the low $70s by November. Expect continued oil price volatility until the Strait of Hormuz is truly fully reopened.