Prediction markets put the probability at 36%: Bab el-Mandeb Strait effectively closed by December 31. Currently, markets are divided (36% YES, 64% NO). Iran tells Houthis to close Red Sea gateway if US hits power network, sources say.
Tension over whether the bab el-mandeb strait effectively closed by december 31 escalated sharply after Iran instructed Yemen's Houthi rebels on Wednesday, July 15 to prepare to close the waterway if the United States strikes Iranian power plants. A source close to the group told Reuters the Houthis had completed preparations to deploy missiles and drones near the strait, positioning them in the highlands overlooking Hodeidah and the Gulf of Aden while awaiting the order to begin. The move follows President Donald Trump's threat to attack Iranian power plants and bridges, with Tehran warning that "all regional infrastructure will be destroyed" if the threats are carried out. [New York Post, Jul 16]
The threat matters because the Bab el-Mandeb is one of the world's most vital energy arteries, a critical gateway linking the Red Sea to the Gulf of Aden on the western side of the Arabian Peninsula. Analysts describe an order to shut it as Tehran's "nuclear option," extending pressure on global trade and energy supplies beyond the Gulf. The stakes are heightened because Iran has already choked off shipping through the Strait of Hormuz; simultaneous disruption of both chokepoints would leave the Middle East's two main oil export routes disrupted at once, opening a new front against Washington. [Times of Israel, Jul 14]
Whether the bab el-mandeb strait effectively closed by december 31 now hinges on US-Iran escalation dynamics. The Houthis have not yet received the final order, and any physical blockade would depend on Washington following through on strikes against Iranian infrastructure. Missiles and drones are reportedly staged and ready, but a formal decision to close the strait remains a contingency rather than an active measure. Markets and shippers are watching for any US action on Iranian power plants, which sources cite as the likely trigger for the bab el-mandeb strait effectively closed by december 31 scenario to materialize. [Reuters, Jul 16]
Lower-volume market on Polymarket ($79K). Wider spreads expected — enter with limit orders and be aware of slippage risk. Currently 31c YES.
Smart money entered NO at 70c.
We tracked 1 wallet with positions above $1K on this market. NO wallets entered between 70c.
| Wallet | Category | Side | Amount | P&L | |
|---|---|---|---|---|---|
| 0x0845..6f | MM | NO | $1.0K | -1% |
NO wallets entered at 70c. At current price 31c, none of the NO holders are profitable vs none of the YES holders are profitable. Both sides have similar profitability — no structural edge.
Polymarket prices YES at 31c with $79K in total volume. Our model estimates fair value at 31c. Model and market are aligned — no pricing discrepancy detected.
| Platform | YES Price | Volume |
|---|---|---|
| Polymarket | 31c | $79K |
| Our Model | 31c | — |