Iran may close Bab-el-Mandeb Strait, complicating Saudi oil exports

Saudi Arabia’s rerouted oil exports through the Red Sea face a new complication: Iran may move to close the Bab-el-Mandeb Strait using Houthi proxies. The market for lifting Trump’s Hormuz blockade by May 31 sits at 82% YES.

## Market reaction

The April 17 market is effectively dead at 3.4% YES with one day left. The April 19 market trades at 9.5% YES, a minor improvement over two extra days. The 64-point jump between April 19 and May 31 odds points to a major expected catalyst in that window.

Trading volume is $33,928 in USDC over the past 24 hours, concentrated in the April 17 market, which is struggling to hold interest. It takes $1,085 to move the April 17 odds by 5 points, making it susceptible to large orders. The biggest recent move was a 4-point drop at 3:18 AM, a bearish signal.

## Why it matters

Iran’s threat to activate the Houthis could be a way to pressure Saudi Arabia, and by extension the US, without directly confronting Trump’s naval forces. This indirect escalation path complicates any timeline for lifting the blockade. At 18¢, a YES share for April 19 pays $1 if the blockade lifts in three days, a 5.5x return, but that requires believing in rapid de-escalation over a very short window.

## What to watch

Confirmation of Houthi movements in the Red Sea and Pentagon statements on naval strategy would directly affect market expectations for blockade duration. The term structure gap between April 19 and May 31 suggests traders expect a resolution event sometime in that range.

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