The Middle East is full of twists and turns, what does Polymarket think?

Written by: Pzai, Foresight News

Recently, news about the conflict between Iran and Israel has dominated the front pages of major news outlets. For people in war-torn areas and users in the global information network, a real-time and effective source of information holds great value. As prediction markets have gradually gained attention as a primary source of information in recent years, especially with their prominent role in the 2024 U.S. elections, the perspectives on topics within prediction markets are also building their reference value for people. This article briefly reviews the fluctuations in viewpoints during the recent conflict.

Earlier on June 18, it was widely circulated on social media that "a huge surprise is about to happen - a surprise that the world will remember for centuries," but no details were provided. However, Rafael Grossi, the Director General of the International Atomic Energy Agency (IAEA), stated on Wednesday that the 409 kilograms (902 pounds) of highly enriched uranium possessed by Iran may have been transferred, raising concerns in the market about the possibility of Iran using nuclear weapons for retaliation. On Polymarket, traders were not optimistic about the probability of Iran using nuclear weapons in 2025; although it quickly soared to 20% on June 18, it swiftly fell back to 13% the following day.

In terms of news, both Israel and the United States have plans to strike Iran's nuclear facilities to varying degrees, and senior European diplomats will hold nuclear negotiations with Iran in Geneva, which somewhat alleviates this possibility. However, the nature of the U.S. negotiations regarding Iran's nuclear program is lackluster. The probability of the U.S. and Iran resuming nuclear negotiations before July is 42%; the probability of reaching a new Iran nuclear agreement before July is 16%, and the probability of reaching an agreement this year is 49%. Meanwhile, the probability of Trump exiting the Iran nuclear negotiations before July is also 28%. In the current context of conflict and expectations for peace talks, traders estimate that the probability of Iran ending uranium enrichment before August is 32%, and the probability of a ceasefire between Israel and Iran before July is roughly between 22% and 23%.

As the conflict escalates, maritime authorities have advised ships to avoid Iranian waters when heading to the Strait of Hormuz. On June 19, former Iranian Minister of Economy Ehsan Khandouzi stated, "Starting tomorrow, within 100 days, no tanker or liquefied natural gas vessel shall pass through the strait without Iranian approval.” Although this is not an official statement, its timing and his high-ranking position may reflect broader sentiments within Iran or serve as a warning for future events. Traders predict a 21% likelihood that Iran will block the Strait of Hormuz before July, with a 37% probability of a blockade within the year.

Trump issued a statement on June 16 calling for Iran's "unconditional surrender" and warned of possible strikes against Iranian leader Ayatollah Ali Ali Khamenei. On June 17, Iranian state media revealed that Supreme Leader Ayatollah Ali Ali Khamenei had not been seen in public for five days and had begun secretly arranging for the transfer of supreme power to the Supreme Council of Iran's Revolutionary Guard Corps, rather than his son Moitaba, as previously speculated. The move shows that in the face of an unprecedented escalation of military pressure from the United States and Israel, the 86-year-old Khamenei is prepared for the worst to ensure that the regime continues in the face of his unforeseen circumstances. But Trump has said he will not take action to get rid of Iran's supreme leader for the time being. Traders predict a 61% chance that Khamenei will leave office this year and a 23% chance that he will leave office before July.

Israeli officials estimate that the U.S. may join the war against Iran on the evening of the 17th, but U.S. President Trump refused to disclose whether the U.S. plans to join Israel's military actions against Iran on June 18, stating that Tehran has made contact with the U.S. regarding the possibility of negotiations. In terms of the likelihood of deployment, traders have been more inclined to buy into the military action of U.S. forces against Iran, with the probability of action before July reaching 67%. Traders even predict a 42% chance of Iran being overthrown by 2025. French President Macron expressed opposition to violently overthrowing the Iranian regime on the 17th, warning that it could lead to instability across the entire Middle East.

As one of Iran's important nuclear facilities, the Fordow enrichment facility is under strategic attention from the U.S. and Israel, while CNN cites sources saying that Trump is increasingly inclined to strike Iran's nuclear facilities. According to Bloomberg, the U.S. is considering launching an attack on Iran this weekend, with the Fordow nuclear facility being a primary target. Traders also expect the probability of a U.S. strike on the Fordow nuclear facility before July to increase to 61%, and the probability of the facility being destroyed before July has also reached 60%.

The recent tensions surrounding the conflict between Iran and Israel have triggered a series of chain reactions and international attention. Predictions from the markets and developments indicate that the core risk of the conflict is focusing on the possibility of the United States taking direct military action against Iran's key nuclear facilities, particularly Fordow, with a significant increase in the likelihood of a broader confrontation in the short term. At the same time, signs of a precautionary power transition within the Iranian regime reflect its heightened concern for the continuity of the regime under immense pressure.

Although concerns about the direct use of nuclear weapons were once assessed by the market as having a low short-term probability, and a complete blockade of the Strait of Hormuz is not imminent, the spiral escalation of conflict and the potential threat to key energy corridors have sharply increased regional security risks. Overall, the situation is developing towards intensified direct military confrontation between the US and Iran, with challenges to the stability of the Iranian regime, and the international community is on high alert for the possibility of further escalation of the conflict.