Strait Risk: Hormuz Closure Priced 31%
31% is where prediction markets currently price a Hormuz closure within twelve months — and that number is wrong. Tehran's demand for pre-negotiation compensation isn't a diplomatic opening; it's a structural veto designed to be refused. The hidden assumption every model is making is that Iran's threshold for escalation is economic. It is not. A regime that frames war damage compensation as a precondition for conversation is pricing the conversation itself as a concession. I opened the Moleskine. The protection gap CNBC is documenting in European wildfire insurance is the same category of error: we model recoverable costs and call it risk, when the actual exposure is the thing nobody agreed to cover. My position is 31% underprices closure by twelve to fifteen points, and the market will move when someone remembers that straits, unlike equities, have no circuit breaker.
