Five days. That's how long the ceasefire lasted as a functioning framework.
Vance walked out of Islamabad on Saturday after 21 hours. No deal. The sticking point was nuclear. "We need to see an affirmative commitment that they will not seek a nuclear weapon." Iran wouldn't give it. Within hours, Trump ordered a US naval blockade of the Strait of Hormuz, effective Monday 10am ET. CENTCOM confirmed. Two supertankers U-turned immediately.
Brent opened this morning at $101.82. Up 6.95%.
Last week I wrote The Pause. The core argument was that the model reads the script while the market reads the actor. Every escalation deadline produced a climbdown. Every "most dangerous inflection point" produced a negotiation. The model kept weighting what was said. The market kept pricing the pattern.
So here's the Week 5 question. Is the blockade a new script, or a new act?
Full methodology here. Live dashboard.
How Week 4 Landed
The model called $123.53 from $109.05. Brent closed at $95.20 on Friday.
Miss of $28.33. The biggest of the experiment. Direction wrong for the second consecutive week. The naive baseline missed by $13.85. The model lost by more than double. The ceasefire announcement on April 7 crashed futures 12% overnight and the model had escalation at 47%.
Four weeks. Four losses to baseline. Perfect CI calibration (4/4 for both 68% and 90%). The model is well-calibrated for uncertainty and structurally biased on the point estimate. That's the honest summary.
Full scoring in the Week 4 outcomes post.
The Case for "This Is Different"
The market moved 7% on the blockade. That's the biggest single-day upside move since the initial invasion, outside the ceasefire crash.
For four weeks the market shrugged off escalation rhetoric. Nuclear strikes. Ground invasion leaks. An F-15 shootdown. Houthi entry. None of it sustained futures above $115. The market absorbed all of it because the pattern was clear. Threaten, escalate, climbdown.
This morning it moved 7%. The market is telling you it distinguishes between a Truth Social post and a CENTCOM operational order.
A naval blockade has physical, measurable consequences from hour one. Ships are already turning around. The OFAC sanctions waiver expires April 19 with no renewal signal. IRGC warned that military vessels at Hormuz "will be dealt with severely." This isn't Power Plant Day Tuesday. This is boats at a chokepoint.
The Case for "Reading the Actor"
But $101.82 is still below $109, where Brent sat before the ceasefire. The market moved 7% up and didn't erase the 13% ceasefire drop. It's pricing "blockade is real but resolution is still possible."
Every Trump deadline has produced a negotiation. The 48-hour Hormuz ultimatum produced the ceasefire. The Easter Power Plant Day threat produced the ceasefire. The ceasefire itself was brokered hours before a "destruction" deadline. Trump's pattern is escalation-as-leverage.
Goldman's base case is still $90 Q2. JPMorgan's is $60. The institutional consensus says this war premium resolves. The physical/futures spread ($132 vs $95 before today's open) says the physical market disagrees. But the physical market has been disconnected from futures for weeks.
The Hedge
Both framings have evidence. The model doesn't get to pick one.
Scenario Probabilities
| Scenario | Week 4 | Week 5 | Change | Why |
|---|---|---|---|---|
| Escalation | 47% | 35% | -12 | The blockade is real (7% move). But 47% lost for four weeks straight. The Pause thesis says the market prices the actor, not the script. Dropping 12 points respects both the blockade and the pattern |
| Stalemate | 23% | 25% | +2 | A blockade can become the new normal. Iran can't reopen Hormuz without concessions. The US can't force it without a shooting war. Both sides sit. Grinding |
| De-escalation | 7% | 12% | +5 | The Islamabad channel exists even though it produced nothing. Goldman $90 is still the base case. The market didn't erase the ceasefire drop. Some probability of resolution persists |
| Demand Destruction | 15% | 18% | +3 | Seven weeks above $95. This is structural now. Purchasing behaviour changes compound whether or not the blockade holds. Goldman $80 Q4. JPMorgan $60 |
| Black Swan | 8% | 10% | +2 | US Navy enforcing a blockade at the same chokepoint where IRGC says military vessels will be "dealt with severely." This is where the tail gets fat. A single engagement changes everything |
Escalation at 35% is the hedge. It's 12 points below Week 4 despite a naval blockade. The reasoning is simple. The model overcalled escalation at 55%, 47%, 47%, and 47% for four consecutive weeks. The market disagreed every time. At some point you listen.
But 35% is also 12 points above where The Pause suggested it should go (high 20s during the ceasefire window). The ceasefire window is over. The blockade is not a deadline or a tweet. It's hardware at a chokepoint.
The model reads the script. The market reads the actor. The hedge reads both.
The Forecast
- Forecast date: 13 April 2026
- Target date: 17 April (Friday close)
- Current price: Brent $101.82 (13 April intraday, blockade-day open)
- Horizon: 4 trading days
- Point estimate: $112.69
- 50% confidence interval: $86.01 to $134.81
- 68% confidence interval: $78.27 – $139.56
- 90% confidence interval: $68.55 – $158.40
Naive baseline comparison: $101.82 (current price as prediction)
The point estimate of $112.69 is $10.87 above the current intraday price. That's the model saying the blockade moves prices upward from here, but not as far as escalation alone would suggest. Stalemate (25%, mode $110) and escalation (35%, mode $135) pull the median up. Demand destruction (18%, mode $70) and de-escalation (12%, mode $85) pull it down.
The 90% interval spans $90. The upper bound of $158.40 is wider than last week's $162.23 despite lower escalation weight, because black swan at 10% (mode $152 from the current price) is fattening the right tail. A US-IRGC naval engagement at Hormuz would blow through $158 before lunch.
The lower bound of $68.55 is wider than it needs to be. De-escalation plus demand destruction probably floors at $80-85 given seven weeks of structural pricing. But the model's triangular distributions are what they are. Week 6 might be time to revisit the scenario ranges rather than just the weights.
Method: Bayesian scenario-weighted Monte Carlo, 10,000 samples, triangular distributions per scenario.
What I'm Watching This Week
- The blockade's first 48 hours. CENTCOM says 10am ET Monday. Does Iran test it? Do ships comply? The difference between a blockade-on-paper and a blockade-in-practice is whether someone gets stopped. First confrontation sets the tone for the week.
- OFAC waiver expiry (April 19). The temporary sanctions waiver on Iranian crude expires Saturday. No renewal signal. If it lapses, ~140 million barrels of Iranian oil at sea become sanctioned again. That's a supply shock on top of a blockade.
- Physical/futures convergence. Dated Brent was at $132 on Friday. Futures opened at $102 today. The $30 spread is the experiment's most persistent anomaly. A blockade should tighten it. If physical falls toward futures, the market sees resolution. If futures rise toward physical, the blockade is biting.
- Goldman and JPMorgan revisions. Goldman cut Q2 to $90 on the ceasefire five days ago. The ceasefire is dead and a blockade is starting. Watch for upward revisions this week. If Goldman goes back above $100, the institutional consensus has shifted.
- IRGC response posture. "Dealt with severely" is the line. Iran has sea mines, fast boats, and anti-ship missiles. The question is whether they engage US Navy vessels or treat the blockade as a face-saving way to blame the US for the closure they already engineered.
Where I Could Be Wrong
Too cautious on escalation. 35% during a naval blockade. Read that sentence again. A US Navy blockade of the world's most important oil chokepoint, with the IRGC threatening military response, and the model says there's a 65% chance something else happens. If the first ship gets stopped and Iran fires on a destroyer, 35% will look like the model learned nothing.
Too dismissive of de-escalation. 12% might be too high, not too low. The talks failed on nuclear, which is structural. There's no back-channel producing a surprise deal this week. But the market didn't erase the ceasefire drop, which means some traders still see resolution as the base case. The model should probably track the smart money, and the smart money hasn't panicked yet.
The model vs the market, again. Four weeks of evidence that the model overcalls escalation relative to futures. Now a blockade is starting and the model's instinct is to overcall escalation again. The hedge at 35% is an attempt to respect the pattern. But respecting a pattern right before the pattern breaks is how you miss the regime change. This is the fundamental tension, and five weeks in, I still don't have a clean answer.
Forecast locked 13 April 2026. No edits after publishing. Live dashboard here.