A US-Iran Ceasefire Is Likely by Year-End, but the Hard Bargaining Has Only Begun

A cessation of hostilities between the United States and Iran is likely to hold through the end of 2025, but the broader confrontation is far from resolved. The money staked across a wide range of related markets tells a consistent and sobering story: a ceasefire is the easy part. The economic warfare, the nuclear standoff, and the question of who rules in Tehran are all drifting toward longer, harder timelines than the initial pause might suggest.

The 80% probability on a year-end ceasefire sits at the top of a sharp downward slope when you look at the near-term milestones. The chance that a genuine pause was in place by early November collapsed by 35 points in a single day, and the mid-November and end-of-November thresholds have both retreated sharply as well. What that pattern implies is not that the ceasefire itself is in jeopardy — it likely holds eventually — but that the fighting, or at least the standoff, is running longer and hotter than optimists assumed even a few days ago. The money has walked away from any early resolution and is now betting on a December finish line, if one comes at all this year.

The Strait of Hormuz is the detail that should concentrate minds. Transit calls through the waterway are almost certainly continuing at some level — the week-by-week traffic contract sits near certainty — but a return to normal commercial flow by year-end is now at just 6%, and the November deadline has effectively been abandoned at 2%. A formal US-Iran agreement specifically covering Hormuz sits at 34%, and an end to the Iranian blockade altogether by early 2027 is at 68%. Read together, those numbers describe a situation in which ships are moving, but under duress, and in which a durable reopening is at best a story for next year. For energy markets, insurers, and the dozen economies that depend on Gulf passage, that is not a footnote — it is the central fact of the ceasefire's real-world value.

Underneath the tactical picture, the deeper architecture of the standoff appears unchanged. A final nuclear deal by year-end is at 10%, barely registering. A US invasion before 2027 sits at 12%, low but not negligible — consistent with a White House that has used force once and may feel the option remains open if diplomacy stalls. The odds of a senior diplomatic meeting between Washington and Tehran by the end of next year have slipped to 40%, down notably in the past day, implying that whatever back-channel produced the ceasefire has not yet evolved into a recognized negotiating track. The regime itself appears stable: the probability that Mojtaba Khamenei holds power through 2026 is very likely at 93%, and the chance the Islamic Republic falls before 2027 is negligible at 3%. Iran is not negotiating from collapse; it is negotiating from a position of internal continuity, which historically means it will move slowly and extract what it can.

What the money is collectively pricing, then, is a managed freeze rather than a resolution. Hostilities pause, the Strait stays restricted, no grand bargain is struck, and both sides pocket a tactical respite while the underlying contest over nuclear capability, regional influence, and economic pressure continues. That read could be wrong in two instructive directions. If back-channel talks accelerate faster than the diplomatic-meeting odds suggest — perhaps brokered by Oman or Qatar, as in prior rounds — the Hormuz and nuclear-deal contracts would reprice sharply upward and confirm that the ceasefire was a genuine opening move. Alternatively, if the pause frays before December, the year-end ceasefire contract would fall toward the November odds that have already largely collapsed, and the invasion contract would be the one to watch. For now, the balance of the evidence favors neither breakthrough nor breakdown — just a long, expensive stalemate with the world's most consequential waterway as the lever neither side is ready to release.