Prediction market Polymarket now shows a 99% probability that Hormuz normalization will not happen by the July 31 deadline. The odds, which have climbed steadily over the past week, reflect growing skepticism among traders that the diplomatic push to ease tensions in the Strait of Hormuz will succeed. The shift comes as Iran's Islamic Revolutionary Guard Corps (IRGC) has warned it could next target the Bab al-Mandeb Strait, potentially with help from Houthi forces in Yemen.
The odds and the deadline
Polymarket bettors have placed roughly $1.2 million on the outcome, with the overwhelming majority wagering against a normalization deal being reached by the end of the month. The July 31 cutoff was set by the Iranian government after a series of indirect talks with the United States and Gulf states, aimed at reducing the risk of a broader regional conflict. Those talks have stalled, sources familiar with the discussions say, and the latest Polymarket data suggests the market expects no breakthrough.
What the IRGC has said
The IRGC's warning, delivered through state-aligned media outlets, did not give a specific timeline but made clear that the strait of Hormuz is not the only chokepoint in Iran's sights. "If the enemy thinks Hormuz is the only place we can apply pressure, they are mistaken," the statement read. "The Bab al-Mandeb is a strategic asset, and our partners in Yemen are ready to act." The IRGC has previously used Houthi proxies to disrupt Red Sea shipping, launching drone and missile attacks on vessels near the Bab al-Mandeb during the recent conflict in Gaza.
Why Bab al-Mandeb matters
The Bab al-Mandeb Strait, a 20-mile-wide waterway between Yemen and Djibouti, funnels about 10% of global seaborne oil shipments. Any disruption there would force tankers to take the long route around Africa, driving up transit costs and insurance premiums. The IRGC's threat to target the strait, with Houthi help, would effectively turn a single-lane pressure point into a two-front crisis. Shipping companies that had begun to relax after the brief Hormuz talks are now scrambling to reassess risk.
The Houthi factor
Houthi forces in Yemen have already demonstrated they can strike vessels in the Red Sea and Gulf of Aden. An IRGC-backed escalation would likely mean more sophisticated attacks — possibly using anti-ship missiles and drones supplied by Iran. The Houthis have not publicly commented on the IRGC's latest warning, but their leadership has repeatedly stated that they coordinate closely with Tehran. A joint operation would allow Iran to maintain a degree of deniability while still putting pressure on global shipping lanes.
The July 31 deadline is now less than two weeks away. Whether the Hormuz talks collapse entirely or produce a last-minute extension remains unclear. What is certain is that the IRGC's warning has already shifted the conversation from a single strait to a broader maritime flashpoint.
