The Probability Desk · June 11, 2026
Executive Summary — Desk View in One Paragraph
Iran's June 8 announcement that the Strait of Hormuz will reopen "under new conditions" — including first-ever transit fees jointly administered with Oman — represents the most consequential chokepoint-policy development since the strait's effective closure on February 28. The Probability Desk assigns a 45% base-case to a contested partial restoration (40-70% of pre-crisis volumes by September 10, 2026), a 25% upside to rapid normalization if the US approves a deal and fees are waived, and a 30% tail to re-escalation into renewed closure or nuclear-facility strikes. The median Monte Carlo Brent trajectory (50,000 paths) sits at $90.84/bbl by September 10 — but the distribution is bimodal: there is a near-equal P(Brent < $85, 30%) and P(Brent > $100, 31%). For a universal owner managing decades-horizon capital, the analytical issue is not just the oil price but the structural precedent: if transit fees are upheld, every major maritime chokepoint becomes a potential toll-gate, and the globalization-dividend embedded in long-horizon return assumptions permanently impairs.
The Trigger
Source: Iranian Ambassador to Russia Kazem Jalali, June 8, 2026 — reported by Gulf News, Marine Insight, Al-Monitor, and Energy Now. The Strait of Hormuz will reopen under conditions "jointly established by Iran and Oman," including a transit fee for vessels navigating the waterway. The fee would compensate for navigation support, security, search and rescue, and environmental response.
This is a ≤72-hour development. The announcement came on June 8 (72-hour window from today, June 11). On June 10, fresh US strikes hit Iranian radar and drone sites, and Iran launched missile responses in the Gulf region — indicating the announcement has not produced a military stand-down.
Context: The Hormuz closure began effectively on March 4-5, 2026, following February 28 US-Israeli strikes on Iran. At peak disruption, Brent exceeded $120/bbl. As of June 8 (FRED DCOILBRENTEU), Brent stands at $97.46/bbl, WTI at $95.00/bbl — elevated but off the peak, suggesting partial bypass routes (Petroline ~2 mb/d; rerouting via Cape) have absorbed some shortfall. Hormuz traffic is down 90-95% from pre-crisis levels per marine traffic data.
The Forecast Question
Question: Does the Strait of Hormuz transit-fee framework (announced June 8, 2026) achieve commercial restoration — defined as ≥70% of pre-crisis tanker transit volumes — by September 10, 2026 (90-day horizon), or does a re-escalation event hold Brent above $100/bbl through Q4 2026?
Horizon: September 10, 2026
Resolution criteria: - PASS (Upside/Normalization): Hormuz daily tanker transits ≥14 mb/d crude equivalent; Brent 4Q26 strip ≤$88/bbl - PARTIAL (Base/Contested Restoration): Hormuz 8-14 mb/d; Brent 4Q26 strip $88-100/bbl - FAIL (Tail/Re-escalation): Hormuz <8 mb/d; Brent 4Q26 strip >$100/bbl
What would change it: US approval or explicit rejection of the transit-fee framework; Iranian or Israeli military escalation to nuclear-facility strikes; FOMC June 16-17 forward guidance under Warsh.
Prior and Base Rates
The historical frequency of major chokepoint disruptions resolving within 90 days with ≥70% flow restoration is the analytical anchor. Four analogues are relevant:
1. 1980-88 Gulf Tanker War (8-year horizon): Iran and Iraq attacked ~400 tankers, yet Hormuz was never fully closed. Traffic continued at reduced levels. Base rate lesson: prolonged partial disruption, not full closure, is the modal outcome of Gulf-theater conflict. The transit-fee concept mirrors tanker-war insurance loads but with state-enforced collection.
2. 2019 Abqaiq Attack (3-week resolution): Saudi Aramco facilities hit; 5.7 mb/d Saudi outage briefly disrupted. Full restoration in 17 days. Base rate lesson: infrastructure attacks resolve faster than war-theater closures. The 2026 event is categorically different — it is a state-declared closure, not a point attack.
3. 2023-24 Red Sea / Houthi disruption (ongoing >18 months): Suez traffic fell 40–57% overall (container shipping fell up to 90%, per Coface, World Bank, and IEA 2024 data); rerouting added 7-14 days per voyage. Disruption was never fully resolved as of early 2026. Base rate lesson: politically-motivated chokepoint restriction, even without full closure, can persist for 12-24+ months.
4. 1956 Suez Crisis (6-month closure): Canal closed for ~6 months; reopened March 1957 under a UN operation; Petroline/Cape rerouting established. Base rate lesson: major strategic chokepoints reopen within 6-12 months under international pressure, but never on the original party's unilateral terms.
Implied base rate for ≥70% restoration within 90 days of a war-theater closure: ~25-30%. The current situation is closest to the Red Sea/Suez analogues in political character (state-directed closure, not infrastructure damage), suggesting the lower end of this range.
Sense check: The transit-fee announcement itself represents a partial legitimization of Iranian maritime sovereignty over international waters — a structural break from prior episodes. This reduces the base rate for rapid normalization below historical norms.
Evidence Update Table (Bayesian)
| # | Evidence Item | Direction | Strength | Probability Impact | Confidence | → Posterior Change |
|---|---|---|---|---|---|---|
| 1 | June 8: Iran/Oman transit-fee announcement — first-ever claim on Hormuz passage | ↓ for rapid normalization | Strong | −8pp to Upside | High | Base rate for rapid deal ↓ |
| 2 | June 10: US strikes on Iranian radar/drone sites; Iranian missile responses | ↓ for ceasefire stability | Strong | +8pp to Tail | High | Re-escalation risk ↑ |
| 3 | US Treasury (Bessent, May 2026): warned Oman against transit-fee involvement | ↓ for deal acceptance | Moderate | −5pp to Upside | Medium | Fee regime US opposition confirmed |
| 4 | May 28: Tentative US-Iran MOU for 60-day ceasefire extension — Trump not yet signed | Mixed | Moderate | Neutral; base case anchor | Medium | Deal possible but fragile |
| 5 | Brent at $97.46 (Jun 8) — off $120 peak, suggesting partial bypass absorption | ↑ for base case | Moderate | +5pp to Base | High | Partial adaptation underway |
| 6 | Hormuz traffic still 90-95% below pre-crisis (commercial shipping data) | ↓ for upside | Strong | −5pp to Upside | High | Full restoration within 90 days unlikely |
| 7 | War-risk insurance: $10-14M per voyage (vs $625K pre-crisis); 340% surge | ↓ for rapid return | Moderate | Partial commercial barrier even if open | High | Upside dampened even if fees resolved |
| 8 | OPEC+ spare capacity ~1.5-2.5 mb/d — almost all behind Hormuz | ↑ for Tail | Moderate | Tail energy shock more severe if re-escalation | Medium | Tail distribution right-tailed |
| 9 | FOMC June 16-17: Warsh debut; 4 dissenters at April meeting (1 wanted cut; 3 objected to easing-bias language) | ↑ for rates staying high | Strong | +5pp to structural hold | High | Fed will not ease regardless of oil path |
| 10 | June 1: Trump near-abandonment of talks ("getting boring") | ↓ for deal | Moderate | +5pp to Tail | Medium | Deal fragility confirmed at highest level |
Starting prior: 30% upside (rapid normalization) / 45% base (partial contested) / 25% tail (re-escalation) After evidence: 25% upside / 45% base / 30% tail Key move: Evidence items 1, 2, 6 jointly reduced the upside probability and raised the tail. The transit-fee mechanism introduces a structural complication that is harder to resolve diplomatically than a simple military ceasefire.
The Scenarios
Scenario 1 — Base Case: Contested Partial Restoration (45%)
Narrative: The June 8 transit-fee announcement creates a partial de facto reopening: tankers with non-US, non-UK, non-Israeli flags, willing to pay Iran/Oman fees (estimated at 1.5-2.5% of hull value per transit), begin resuming passage from late June into July. Commercial traffic reaches 40-65% of pre-crisis levels by September 10. Brent stabilizes in the $88-100 range as partial rerouting, Petroline pipeline bypass (~2 mb/d), and strategic petroleum reserve releases (US SPR drawdown of 70+ mb over 5 weeks) absorb some shortfall. The FOMC (June 16-17) holds at 3.50-3.75% with a neutral/slightly hawkish Warsh tone; the September cut possibility remains on the table. Peace talks continue mediated by Pakistan/Qatar but remain unresolved. US Congress and Treasury maintain opposition to transit fees, creating diplomatic friction but no military escalation.
Key trigger for this scenario: Tanker operators — led by non-US Asian flag fleets serving Chinese/Indian refiners — begin paying fees rather than waiting for US approval. A critical mass of commercial self-interest overrides the political standoff.
Tripwire that would move to Upside: Formal US acceptance of fee framework or a bilateral deal that explicitly waives fees for US-allied operators.
Tripwire that would move to Tail: US or Israeli strike on Iranian nuclear facilities (Fordow, Natanz, Isfahan) within the 90-day window; Iranian mines returned to the strait.
Brent range (P25-P75): $83-108/bbl. US 10Y range: 4.20-4.85%.
Scenario 2 — Upside: Rapid Normalization (25%)
Narrative: Within 30-45 days, the US and Iran reach a signed comprehensive deal — building on the May 28 tentative MOU — that includes Hormuz reopening, an end to transit-fee claims (or fee acceptance with US/EU offsetting subsidy), a nuclear enrichment freeze, and sanctions partial relief. Commercial shipping confidence recovers rapidly; war-risk insurance premiums fall to $2-3M per voyage (still elevated but manageable). Hormuz transits reach 75-90% of pre-crisis levels by September 10. Brent falls into the $68-93 range. Warsh's June 16-17 FOMC surprises markets with a dovish tilt in the Summary of Economic Projections — possibly one 2026 cut signaled — as energy price relief gives inflation cover for easing. US 10Y falls toward 4.10-4.40% as the risk premium deflates.
Key trigger for this scenario: Trump signs an executive agreement before June 30, framed as a victory — "the greatest peace deal in history."
Tripwire to watch: Formal US-Iran signing ceremony or CNBC interview with Trump claiming deal signed; Brent moves below $88 on same day.
Brent range (P25-P75): $76-84/bbl. US 10Y range: 3.95-4.45%.
Scenario 3 — Tail: Re-escalation / Nuclear Strike (30%)
Narrative: The June 10 military exchanges (US strikes on Iranian radar/drone sites; Iranian missile responses) signal that the ceasefire is fragmenting. Within 30-60 days, the US and/or Israel escalates to strikes on Fordow uranium enrichment, Natanz, and Isfahan nuclear facilities. Iran retaliates by mining the strait and reopening the Hormuz military exclusion zone. Commercial shipping returns to near-zero. Brent surges from $97 toward $115-135 ($120 in the central tail path). The FOMC faces a stagflationary dilemma: four dissenters push toward a hawkish-hint or explicit rate-hold signal for all of 2026 and 2027. The 30Y Treasury yield moves above 5.10% as fiscal risk reprices. Gulf sovereign credit (Saudi, UAE, Qatar CDS) widens as the region becomes uninvestable for most institutional mandates. EM oil importers (India, Turkey, Indonesia) face twin shocks — higher import costs + dollar appreciation.
Key trigger: Confirmed strike on Iranian nuclear infrastructure (Fordow/Natanz/Isfahan by US or Israel); Iranian announcement of full strait re-closure; VLCCs refusing transit regardless of fee.
Tripwire to watch: US CENTCOM press release on nuclear-facility strikes; Brent >$105 in the next 14 days; Iranian IRGC announcement of new naval exclusion zone.
Brent range (P25-P75): $109-127/bbl. US 10Y range: 4.65-5.10%.
The Monte Carlo
Simulation design and results — 50,000 paths, horizon: September 10, 2026
Real simulation using numpy. MiroFish unavailable — two-input ensemble (base-rate 0.55 / expert-prior 0.45). Inputs documented below.
Variables modeled: - Regime assignment (3-state: Base 45%, Upside 25%, Tail 30%) - Brent spot at Sep 10: conditional normal distributions per regime (Base: μ=$90, σ=$6; Upside: μ=$80, σ=$5; Tail: μ=$118, σ=$10), with empirically justified bounds - Hormuz transit volume (% of pre-crisis 20 mb/d): conditional distributions per regime (Base: μ=52%, σ=8%; Upside: μ=82%, σ=5%; Tail: μ=12%, σ=7%) - US 10Y yield: conditional distributions correlated with oil path
Correlation assumptions: Tail regime → joint right-tail in both Brent AND 10Y (stagflationary channel); Upside → joint left-tail in Brent AND 10Y (disinflation + cut-pricing channel). Base → range-bound correlation ~0.3.
Limitations: (1) Tail scenario distribution is symmetric around $118; real escalation paths may have fatter right tails up to $140+. (2) Model uses 3 discrete regimes; continuous path-dependent dynamics (e.g. ratchet escalation) not captured. (3) No correlation with equity volatility or EM FX is modeled. (4) MiroFish second-order/contagion paths unavailable.
Results:
| Metric | P10 | P25 | Median | P75 | P90 |
|---|---|---|---|---|---|
| Brent Sept 10 ($/bbl) | $78 | $83 | $91 | $108 | $122 |
| Hormuz transit (% pre-crisis) | 9% | 26% | 51% | 79% | 83% |
| US 10Y (%) | 4.17% | 4.30% | 4.51% | 4.72% | 4.86% |
Threshold probabilities: - P(Brent > $100/bbl by Sept 10) = 30.7% - P(Brent > $115/bbl) = 18.4% - P(Brent < $85/bbl) = 30.3% - P(Hormuz ≥70% full restoration) = 25.2% - P(Hormuz partial 40-70%) = 42.1% - P(Hormuz <40%, near re-closure) = 32.8% - P(US 10Y > 4.75%) = 19.6% - P(US 10Y < 4.30%, cut-pricing) = 23.1%
Key insight from simulation: The Brent distribution is bimodal — there is near-equal probability of a sub-$85 world (normalization) and a $100+ world (re-escalation). The median $91 is a central value that may correspond to neither likely regime. Investors who position only for the median are exposed to both tails simultaneously.
Market vs. Desk View
What markets are pricing (as of June 11): - Brent spot: $97.46 — slightly above the PD median of $91, suggesting markets are pricing ~55-60% probability of a contested/elevated scenario (above base median). - VIX: 22.22 — elevated but not in crisis territory (>30). Markets have not priced full re-escalation. - US 10Y: 4.55% — within our base-case range, consistent with "hold all year" Fed pricing. - 5Y breakeven: 2.40%; 10Y breakeven: 2.29% — inflation expectations anchored. Market does not yet price a stagflation tail. - 5y5y fwd: 2.18% — long-run inflation expectations well anchored, consistent with base case. - USD Broad: 120.08 — elevated, consistent with geopolitical risk premium and Fed hold. - US 30Y: 5.03% — above the 5.00% threshold from our June 9 PD scenario; consistent with entrenched term premium.
What the Desk sees: - The market appears to be pricing a 37-40% probability of rapid normalization (implied by Brent-forward curves near $92-94 for 4Q26 vs. our base of $90-100). The Desk sees only 25%. - The 30Y tail at $115+ is materially under-priced at current VIX 22. Our simulation puts P(Brent > $115) at 18.4%, but the VIX/CDS structure implies markets are treating this as <10%. We see higher re-escalation probability than market structure suggests. - Insurance cost is a second-order inflation channel that the Fed is not modeling. War-risk premiums of $10-14M per voyage translate to ~$0.5-0.8/bbl freight premium on top of crude costs — a persistent inflation add-on that doesn't disappear with partial Hormuz reopening. - Transit fees, if formalized, are structurally inflationary at ~$0.8-1.5/bbl equivalent. The market does not appear to have priced a permanent fee regime. - Highest-conviction mispricing: VIX 22 vs. P(Tail) 30% — options convexity in crude is materially cheap given re-escalation risk.
Universal-Owner Portfolio Heatmap
All directions are analytical assessments of risk direction, not personalized advice. For a universal owner managing diversified multi-asset portfolios.
| Asset Class | Base (45%) | Upside (25%) | Tail (30%) |
|---|---|---|---|
| Global equities (developed) | ⬇ Slight: earnings pressure from energy costs; Fed hold | ⬆ Strong: oil relief + cut pricing lifts multiples | ⬇⬇ Severe: stagflation repricing + multiple compression |
| Energy equities (integrateds) | ⬆ Neutral-positive: $90 Brent, constrained supply | ⬇ Pressure: rapid Brent fall below $85 | ⬆⬆ Strong: $115+ Brent, producers benefit |
| Infrastructure / Pipelines | ⬆ Positive: rerouting capex, Petroline utilization ↑ | ⬇ Mixed: normalization reduces bypass premium | ⬆ Strong: forced capex into non-Hormuz routes |
| Shipping (VLCC/tanker) | ⬆ Positive: rerouting + war-risk premium → day rates elevated | ⬇ Pressure: normalization collapses war-risk freight rates | ⬆⬆ Strong: extreme day rates ($538-770K/day seen in crisis) |
| Global bonds (long-duration) | ⬇ Slight: Fed hold, no rally | ⬆ Strong: cut pricing, 10Y falls to 4.1-4.4% | ⬇⬇ Severe: stagflation/hike-hint; 30Y → 5.2-5.5% |
| IG credit | ⬇ Slight: energy sector spread widening | ⬆ Positive: risk-on, normalization | ⬇⬇ Severe: HY OAS >400bp; energy HY at risk |
| EM sovereign (oil importers: India, Turkey, Indonesia) | ⬇ Pressure: import bill elevated, FX stress | ⬆ Strong: oil relief + USD softening → rally | ⬇⬇ Severe: twin shock (oil bill + USD appreciation) |
| Gulf sovereign bonds (Saudi, UAE, Qatar) | ⬆ Positive: elevated revenue, fiscal surplus | ⬇ Moderate: rapid normalization compresses oil revenue | ⬇⬇ Severe: region uninvestable for 6-12 months; CDS widens sharply |
| Gold / Real assets | ⬆ Positive: uncertainty bid, inflation hedge | ⬇ Moderate: safe-haven premium deflates | ⬆⬆ Strong: crisis haven; geopolitical premium peaks |
| Private credit | ⬇ Pressure: EM energy-import cos under stress | Neutral | ⬇⬇ Severe: sponsor stress in energy/shipping/EM |
| Real estate (global) | Neutral | ⬆ Cut-pricing improves cap-rate outlook | ⬇ Higher real rates; risk-off sentiment |
| Commodities (ex-energy) | ⬆ Slight: supply-chain cost push | Neutral | ⬆⬆ Strong: supply-chain disruption + shipping bottleneck |
Second- and Third-Order Effects
Energy → Inflation → Fed → Rates: The core mechanism. $97+ Brent keeps US headline CPI elevated (energy is ~7% weight). Core PCE, already at elevated levels with the last print at index level 129.63 (April 2026), faces upward pressure from freight/insurance cost pass-through. The FOMC (June 16-17) will almost certainly hold at 3.50-3.75%; the question is whether Warsh's press conference signals a hike-lean (tail) or a neutral-to-patient posture (base). Four dissenters at the April meeting: one (Miran) dissented for an immediate cut; three (Hammack, Kashkari, Logan) objected to the committee's easing-bias language without calling for hikes — reflecting a divided committee uncertain about the direction of easing, not yet signalling rate increases.
Transit-fee precedent → Chokepoint recalibration across all straits: If Iran and Oman successfully levy transit fees on Hormuz, this sets a template. The Strait of Malacca (26% of global trade), the Bosphorus (critical Turkey leverage over Black Sea exports), and the Danish Straits all have ripple-potential for similar state-driven toll claims. A universal owner's long-run return model should factor in a structurally higher "chokepoint friction" cost on global trade — estimated at 0.3-0.7% annualized drag on globalization dividend in a persistent fee world.
OPEC+ fiscal recalibration: Saudi Arabia's fiscal breakeven (IMF 2026 estimate: ~$68-72/bbl) is comfortably covered at $97. In the tail scenario ($115+), Saudi Arabia and UAE see windfall fiscal surpluses that accelerate PIF/ADIA deployment into global assets — potentially creating unusual "force buying" into long-duration real assets, infrastructure, and private equity from Gulf SWFs as their strategic allocations are overwhelmed by new inflows.
EM oil-importer sovereign stress: India's oil import bill in the tail scenario approaches $250B annualized, equivalent to ~6.5% of GDP. Turkey is more fragile — Brent above $110 with TRY weakness creates a current-account/FX feedback loop. Indonesia's fuel subsidy bill becomes politically unsustainable. Central banks in these economies face a stagflationary dilemma identical to the Fed's but with less institutional credibility and smaller FX reserves.
Nuclear nonproliferation architecture: A successful US-Israel strike on Iranian nuclear facilities (tail trigger) triggers Iran to withdraw from the NPT, accelerating a regional nuclear hedging dynamic. Saudi Arabia's nuclear program (Abdel Aziz enrichment ambitions), Turkey's nuclear-latency aspirations, and potential Egyptian hedging all gain momentum. This is a decade-horizon systemic risk for any owner with sovereign and infrastructure exposure to the MENA region.
Insurance market restructuring: Lloyd's market war-risk appetite survives the 2026 crisis (88% of Lloyd's participants still underwrite per LMA data), but at fundamentally higher structural premiums. A persistent $5-8M per-voyage war-risk floor in the Gulf becomes a structural feature of global trade costs, not a temporary shock. This reprices container shipping, LNG spot, and oil tanker charter economics permanently for any scenario where Iran retains military leverage over the strait.
Watch Dashboard
| # | Indicator | Current Reading | Source | Threshold Changes Model | Directional Signal |
|---|---|---|---|---|---|
| 1 | Brent crude spot | $97.46/bbl (Jun 8) | FRED DCOILBRENTEU | >$105 = Tail strengthens; <$88 = Base/Upside bifurcates | Neutral-elevated |
| 2 | Hormuz daily tanker transits (AIS) | ~5-10% of pre-crisis | Marine traffic / Kpler | >40% = Base confirmed; >70% = Upside; <5% = Tail re-closure | Critical watch |
| 3 | War-risk insurance premium (Lloyd's Gulf) | $10-14M/voyage (340% above pre-crisis) | LMA / Lloyd's List (Jun 2026) | <$5M = deal progress; >$15M = re-escalation | Tail-watch |
| 4 | FOMC fed funds rate / Warsh press conference | 3.50-3.75% | Federal Reserve | Explicit hike hint = Tail flag; Sept cut signal = Upside | June 16-17 critical |
| 5 | VIX | 22.22 (Jun 10) | FRED VIXCLS | >30 = Tail pricing; <18 = Upside pricing | Slightly elevated |
| 6 | US 10Y | 4.55% (Jun 10) | FRED DGS10 | >4.75% = Tail/hike-path; <4.30% = Upside/cut-path | Watch direction |
| 7 | US 30Y | 5.03% (Jun 10) | FRED DGS30 | Sustained >5.30% = term-premium spiral (Jun 9 PD scenario) | Above key threshold |
| 8 | 5Y breakeven inflation | 2.40% (Jun 11) | FRED T5YIE | >2.65% = inflationary path; <2.20% = disinflationary path | Elevated-contained |
| 9 | US-Iran signed deal / Trump announcement | Tentative MOU only (May 28) | CNBC, CNN, Axios | Signed deal = Upside confirmation | Pivotal |
| 10 | US/Israeli strike on Iranian nuclear sites | None confirmed as of Jun 11 | CENTCOM / Reuters | Confirmed strike = Tail trigger | Critical tail-watch |
| 11 | Saudi Aramco Petroline pipeline (East-West) | ~2 mb/d (partial bypass) | EIA / IEA | >3 mb/d = Base path confirmed; <1 mb/d = bypass lost | Upside signal |
| 12 | Brent-WTI spread | $2.46/bbl | FRED | >$5 = Gulf premium re-escalating | Watch |
| 13 | OPEC+ emergency meeting / quota decision | Next scheduled TBD | OPEC | Emergency meeting = regime change; large hike = Upside | Watch |
| 14 | CME FedWatch: 2026 cuts implied | ~0-1 cut | CME | >2 cuts = Upside pricing; 0 + hike-hint = Tail path | Watch post-Jun 17 |
| 15 | Iran IRGC / CENTCOM naval statements | Active exchanges Jun 10 | Reuters, AP | Naval exclusion zone = Tail; formal ceasefire = Base/Upside | Critical |
Red-Team — How This Could Be Wrong
Counter-argument 1 — The transit fee framework normalizes faster than the Desk expects. The Desk's 25% upside probability may understate the commercial realism of the fee framework. Asian flag carriers (primarily Chinese, Indian, Singaporean operators) serving CNPC, Reliance, and Pertamina have strong economic incentives to simply pay Iran's fee rather than wait for US political resolution. If 30-40% of global tanker capacity chooses to pay, Hormuz could reach 60-70% of pre-crisis flows within 45 days without any US deal — which would count as the upper boundary of the Base case or entry to the Upside. The Desk would be wrong if the commercial self-interest of non-US operators moves faster than the diplomatic timeline.
Counter-argument 2 — Re-escalation probability is overstated at 30%. The June 10 military exchanges were on radar/drone infrastructure, not strategic assets — a pattern consistent with the "limited escalation" mode that characterized the March-May 2026 period rather than a prelude to nuclear strikes. The Desk's 30% tail may implicitly overweight a US/Israeli decision to strike nuclear sites, which requires either a domestic political trigger (Trump changing course) or an Israeli unilateral act. Both are lower-probability than the 30% figure implies, if one believes current signaling indicates the US is not prepared for a nuclear-site strike this quarter. Counter-argument: lower the Tail to 20%, raise Base to 55%.
Counter-argument 3 — The inflation/Fed channel is more benign than modeled. The 5y5y forward inflation expectation (2.18% as of June 11) and the 10Y breakeven (2.29%) are both well below the Fed's historical comfort threshold of 2.5-2.7%. If consumers and businesses have absorbed the oil shock and inflation expectations remain anchored, Warsh can maintain a patient posture regardless of Brent at $97. The Desk's assumption that Brent >$100 triggers a Warsh hike-hint may overstate the mechanical link between oil prices and Fed policy in a world where energy-efficiency improvements have reduced oil's CPI transmission compared to 1970s analogues. The Desk would be wrong if Warsh's June 16-17 press conference is explicitly dovish — signaling that even $100 Brent doesn't change the "patient hold" path.
Methodology Box
The UAO Probability Desk uses a two-input ensemble (MiroFish unavailable — "MiroFish: unavailable" in this episode's worksheet): base-rate historical frequency (weight 0.55) and expert-prior published house views (weight 0.45). The base rate is anchored to four historical analogues (Gulf Tanker War, 2019 Abqaiq, Red Sea 2023-24, Suez 1956). Expert priors draw from FOMC April 2026 minutes, Fortune/CNBC FOMC reporting, Lloyd's LMA survey (Jun 2026), Al-Monitor/Gulf News (Jun 8), and US Treasury commentary (May 2026). The Monte Carlo (50,000 paths) models Brent, Hormuz transit volume, and US 10Y as conditional distributions per regime. Full worksheet available on request.
Starting prior: Upside 30% / Base 45% / Tail 25%. After evidence update: Upside 25% / Base 45% / Tail 30%. Evidence items 1, 2, 6 — transit-fee structural complexity, June 10 exchanges, 90-95% shipping depression — moved the Upside down and Tail up.
Source Ledger
| # | Source | URL / Reference | Date | Data Point | Confidence |
|---|---|---|---|---|---|
| 1 | FRED DCOILBRENTEU | fred.stlouisfed.org | Jun 8, 2026 | Brent crude $97.46/bbl | H |
| 2 | FRED DCOILWTICO | fred.stlouisfed.org | Jun 8, 2026 | WTI crude $95.00/bbl | H |
| 3 | FRED DGS10 | fred.stlouisfed.org | Jun 10, 2026 | US 10Y yield 4.55% | H |
| 4 | FRED DGS30 | fred.stlouisfed.org | Jun 10, 2026 | US 30Y yield 5.03% | H |
| 5 | FRED DGS2 | fred.stlouisfed.org | Jun 10, 2026 | US 2Y yield 4.13% | H |
| 6 | FRED T5YIE | fred.stlouisfed.org | Jun 11, 2026 | 5Y breakeven 2.40% | H |
| 7 | FRED T10YIE | fred.stlouisfed.org | Jun 11, 2026 | 10Y breakeven 2.29% | H |
| 8 | FRED T5YIFR | fred.stlouisfed.org | Jun 11, 2026 | 5y5y fwd inflation 2.18% | H |
| 9 | FRED VIXCLS | fred.stlouisfed.org | Jun 10, 2026 | VIX 22.22 | H |
| 10 | FRED DTWEXBGS | fred.stlouisfed.org | Jun 5, 2026 | USD Broad Index 120.08 | H |
| 11 | FRED DFII30 | fred.stlouisfed.org | Jun 10, 2026 | 30Y TIPS real yield 2.78% | H |
| 12 | Gulf News / Marine Insight | gulfnews.com / marineinsight.com | Jun 8, 2026 | Iran/Oman announce Hormuz transit fees | H |
| 13 | Al-Monitor | al-monitor.com | Jun 8, 2026 | "Hormuz will be open but with transit fees" (Iranian envoy to Moscow) | H |
| 14 | JNS | jns.org | Jun 2026 | US, Europe, Gulf oppose transit tolls on international waterway | H |
| 15 | EnergyNow | energynow.com | Jun 8, 2026 | Transit fee announcement detail | H |
| 16 | CNBC (oil prices / June 10 exchanges) | cnbc.com | Jun 10, 2026 | US strikes on Iranian radar/drone sites; Iranian missile responses | H |
| 17 | LMA / Lloyd's (LMA Safety Statement) | lmalloyds.com | Jun 2026 | 88% Lloyd's participants still underwrite Gulf war risk | H |
| 18 | Lloyd's List (war-risk premiums) | lloydslist.com | Jun 2026 | $10-14M per voyage war-risk premium | H |
| 19 | Bahrain Intelligence / Lloyd's | bahrainintelligence.com | 2026 | 340% surge in war-risk premiums since Feb 28 | M |
| 20 | CNBC (Warsh / FOMC) | cnbc.com/june 7, 2026 | Jun 7, 2026 | Trump says Fed rate increase would be wrong ahead of Warsh debut | H |
| 21 | Chase / FOMC preview | chase.com | Jun 2026 | Kevin Warsh June FOMC preview: hold expected, dot plot focal point | H |
| 22 | Federal Reserve (Apr 29 FOMC minutes) | federalreserve.gov | Apr 29, 2026 | 4 dissenters; hold at 3.50-3.75%; "most divided since 1992" | H |
| 23 | Axios (Iran deal terms) | axios.com | May 24, 2026 | US-Iran deal: 60-day ceasefire; Hormuz reopen; Iran free to sell oil; nuclear talks | H |
| 24 | CNBC (ceasefire news) | cnbc.com | Jun 1, 2026 | Trump near-abandonment of talks; "getting very boring" — Trump quote from CNBC interview; CNN covered as secondary report | H |
| 25 | Fortune (Hormuz stall) | fortune.com | May 16, 2026 | US, Iran stall on Hormuz reopening | H |
| 26 | Al Jazeera (safe shipping) | aljazeera.com | Apr 28, 2026 | Commercial traffic unlikely to return immediately | H |
| 27 | IEA Hormuz Factsheet 2026 | iea.blob.core.windows.net | Feb 2026 | 20 mb/d transited in 2025; ~25% global seaborne oil | H |
| 28 | Discovery Alert / LNRG (OPEC spare capacity) | discoveryalert.com.au / lnrg.technology | 2026 | All spare capacity behind Hormuz (Vitol CEO) | M |
| 29 | Wikipedia: 2026 Strait of Hormuz crisis | en.wikipedia.org | Jun 2026 | Closure began Mar 4-5; 90-95% traffic reduction | M |
| 30 | House of Commons Library | commonslibrary.parliament.uk | Jun 2026 | US-Iran ceasefire and nuclear talks 2026 timeline | H |
| 31 | CNBC (ceasefire) | cnbc.com | May 28, 2026 | Tentative MOU for 60-day ceasefire extension; Trump not yet approved | H |
| 32 | World Bank (Saudi GDP) | data.worldbank.org | 2024 | Saudi Arabia GDP $1.24T (2024 USD) | H |
| 33 | OilPrice.com (spare capacity) | oilprice.com | 2026 | "A Barrel Trapped Behind Hormuz Isn't Spare Capacity" | M |
| 34 | Energy Intelligence (spare capacity) | energyintel.com | 2026 | OPEC spare 5.8 mb/d stated; ~1.5-2.5 mb/d real deployable | M |
| 35 | Facebook / Saudi Times (OPEC+) | facebook.com/SaudiTimes | Mar 2026 | OPEC+ resumed gradual production increase (+206k b/d Mar 2026) | M |
| 36 | Historical: 1956 Suez Crisis | academic record | 1956-57 | Canal closed 6 months; reopened under UN operation | H |
| 37 | Historical: 2019 Abqaiq attack | Reuters/EIA contemporaneous | Sep 2019 | 5.7 mb/d outage; restored in 17 days | H |
| 38 | Historical: Red Sea 2023-24 | Coface/World Bank/IEA | 2023-24 | Suez traffic fell 40–57% overall (container shipping up to -90%); rerouting 7-14 days; unresolved by early 2026 | H |
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