Yucatan Channel: Energy Gateway & Hurricane Risk Node

The Yucatan Channel, connecting the Caribbean Sea with the Gulf of Mexico, facilitates 16,114 annual transits primarily carrying oil and gas between the Caribbean basin, Mexico, and US Gulf Coast refineries. For traders monitoring US energy markets, Yucatan Channel transit data provides real-time signals for crude oil supply disruptions, refinery utilization rates, hurricane season volatility, and geopolitical risk pricing in the Western Hemisphere.

Why Yucatan Channel Matters

The Yucatan Channel offers a natural 217 km wide passage between Mexico's Yucatan Peninsula and Cuba's western tip, serving as the sole practical gateway between the Caribbean Sea and the Gulf of Mexico. Unlike artificial chokepoints (Suez, Panama), the Yucatan Channel operates continuously with no tolls, locks, or capacity constraints—making disruptions purely weather- and geopolitics-driven.

For prediction market participants, the Yucatan Channel represents a seasonal risk node with distinct hurricane season volatility (June-November) and year-round energy trade flows. Unlike Strait of Hormuz (Middle East political risk) or Malacca (piracy), Yucatan Channel risk is predominantly natural disaster-based, creating clean binary and scalar market setups around hurricane disruption frequency, Gulf Coast refinery outages, and crude oil supply shocks.

2024 Hurricane Impacts: Record Disruption The 2024 Atlantic hurricane season featured 18 named storms, including 11 hurricanes and 5 major hurricanes, significantly surpassing traditional averages. Hurricane Beryl made history as the earliest Category 5 hurricane ever recorded (July 1, 2024), with its path spanning from the Caribbean through the Yucatan Channel to the Gulf of Mexico and Texas. Hurricane Milton formed in the Gulf and rapidly intensified in under 36 hours, demonstrating the region's explosive storm development potential.

Unplanned crude oil production outages in the US Gulf of Mexico averaged 295,000 barrels per day in September 2024 and 110,000 bpd in November 2024, accounting for 16% and 5% respectively of total federal Gulf waters production. Natural gas production outages averaged 0.20 billion cubic feet per day in September and 0.07 Bcf/d in November, representing 11% and 3% of federal gas production. The season caused an estimated $200 billion in total damage across the region.

2025 Hurricane Season Outlook With warmer than normal ocean waters, forecasters are expecting yet another unusually busy hurricane season for the Atlantic in 2025, but they don't think it will be as chaotic as 2024, the third-costliest season on record. Mexico's National Weather Service projects between 13 and 17 total named storms in the Atlantic basin this year, with an estimated 7 to 9 becoming tropical storms of moderate strength and an additional 3 to 4 maturing into Category 3, 4, or 5 hurricanes. The outlook for Mexico's side of the Gulf of Mexico remains concerning, with elevated risk of disruption particularly between mid-August and mid-October.

Economic Impact on Gulf Coast Energy US Gulf Coast refineries process over 9 million barrels per day of crude oil, with the region serving as America's energy processing hub. Yucatan Channel disruptions constrain crude oil imports from Mexico and Venezuela, forcing refiners to draw down inventories or seek alternative supply sources. This creates cascading effects: refined product shortages in Southeast and Midwest markets, tightened gasoline and diesel spreads, and increased dependence on strategic petroleum reserves during prolonged disruptions.

Mexico's state oil company Pemex has faced dramatic export declines, with crude oil exports plummeting 44% year-over-year in January 2025 to 532,404 bpd—the lowest since records began in January 1990. Of this, 320,944 bpd went to the Americas (primarily the United States), representing 36% less year-over-year. Quality issues have emerged, with US Gulf Coast refiners balking at high water and salt content in Mexican crude, preferring Colombian and Canadian alternatives. However, 57% of Pemex's 806,000 bpd 2024 exports were destined for the United States, all transiting the Yucatan Channel.

Signals Traders Watch

Hurricane Season Forecasts NOAA and Mexico's National Weather Service publish seasonal outlooks in May each year. For 2025, forecasters predict 13-17 named Atlantic storms, with 7-9 tropical storms and 3-4 Category 3+ hurricanes. The outlook for Mexico's Gulf coast remains concerning, with both national and international forecasts indicating heightened tropical activity. Elevated risk periods concentrate between mid-August and mid-October, creating natural trading windows for hurricane disruption markets.

Binary markets on "Will a hurricane cause 200,000+ bpd Gulf of Mexico production shut-ins during August-October 2025?" offer direct exposure to peak season risk. Historical data shows September consistently exhibits the highest disruption frequency, with 2024's 295,000 bpd outages establishing a benchmark for severe scenarios.

Gulf Coast Refinery Utilization Rates The US Energy Information Administration (EIA) publishes weekly refinery utilization data every Wednesday. PADD 3 (Gulf Coast) utilization rates normally run 92-96% during non-maintenance periods. In 2025, refineries have been running hot, with US refineries processing more than 17.2 million bpd of crude oil from May through August, one of the highest run rates in years, as strong margins and ample domestic supply gave refiners every reason to maximize refinery inputs. After undergoing seasonal maintenance, Gulf Coast utilization began increasing in March going into the second quarter as refiners prepare for the summer demand season.

Drops below 88% signal either feedstock supply constraints (Yucatan Channel disruptions affecting Mexican/Venezuelan imports) or hurricane-induced shutdowns. Traders monitor week-over-week changes: 3-5% drops indicate minor weather disruptions or single-refinery maintenance; 8-12% drops confirm major hurricane impacts or widespread feedstock shortages.

WTI-Brent Crude Oil Spread The WTI-Brent spread reflects US crude oil export/import economics. In 2025, the spread has been trading at discounts as much as minus $4.34 a barrel, with spreads wider than minus $4 encouraging US exports. The narrower spread compared to 2024 increased the attractiveness of light barrels to refiners in the Gulf Coast, leading to them running more light crude in the summer months than normal and reducing barrels heading onto ships for export.

WTI Houston's premium to WTI in Midland, Texas, is set to hold at 50 cents/barrel or wider in 2025, boosted by swelling volumes headed toward the Gulf coast as Houston grows in importance as a center for price discovery.

When Yucatan Channel disruptions constrain Mexican or Venezuelan imports, Gulf Coast refiners increase light crude processing from domestic Permian Basin production, affecting WTI-Brent spreads. Narrowing spreads signal reduced import dependency, potentially indicating sustained Yucatan Channel disruptions or Mexican supply shortfalls.

Mexican Pemex Export Volumes Pemex publishes monthly petroleum statistics at pemex.com/en/investors/publications. January 2025's 44% export collapse to 532,404 bpd marked a historic low, with Americas-bound volumes falling to 320,944 bpd. Monitor month-over-month changes: sustained declines below 500,000 bpd total exports (or 300,000 bpd to Americas) indicate structural production problems affecting Yucatan Channel energy flows.

US oil refiners along the Gulf Coast have been snubbing shipments from Mexico and instead turning to Colombia and Canada amid complaints that Pemex is increasingly delivering crude that's unfit to make gasoline and diesel. Pemex's CEO acknowledged the company had a "temporary" problem with too much salt and water in its crude oil and conceded that some customers had complained. Heavy crude oil volumes sent to US Gulf Coast refineries have fallen as new infrastructure has allowed greater volumes of Western Canadian Select heavy crude oil to reach PADD 3 refineries.

Sources at Pemex's trading arm have indicated that China, India, South Korea and even Japan would be suitable markets for Mexican crude in light of the United States tariffs on Mexican goods, suggesting potential diversification away from US Gulf Coast refineries that could further reduce Yucatan Channel northbound crude traffic.

Venezuelan Oil Sanction Enforcement US Treasury Department OFAC sanctions directly impact Yucatan Channel traffic. On March 4, 2025, OFAC amended Chevron's General License, effectively requiring the company to wind down operations in Venezuela before May 27, 2025. Despite sanctions, Venezuelan exports to the United States reached 250,000 barrels per day in January 2025, the highest level since the oil sanctions were imposed in early 2019.

On or after April 2, 2025, a tariff of 25 percent may be imposed on all goods imported into the United States from any country that imports Venezuelan oil, whether directly from Venezuela or indirectly through third parties. This tariff has been subject to legal challenge.

Some ships' captains and owners sympathetic to Venezuela have turned off their transponder locations to avoid the US sanctions and deliver oil to Russia, China, and India, creating an environmental risk of ship collisions in the Yucatan Channel and Caribbean approaches. Several leaders of Caribbean countries supporting Maduro have criticized the US sanctions, saying their support for Maduro was based on principles, not oil, and that sanctions were affecting their countries' supply, debt payments, and the region's stability.

Cuba-US Relations and Maritime Regulations January 2025 saw President Trump restore Cuba to the State Sponsor of Terrorism list (after brief removal by Biden administration), with March 2025 US Coast Guard announcing mandatory conditions of entry for boats arriving from Cuba alongside 21 other countries. February 2025 brought reinstatement of the Cuba Restricted List (CRL) with 237 entities added.

On January 14, 2025, the Biden administration temporarily removed Cuba from the State Sponsors of Terrorism list as part of a prisoner release deal, though this was quickly reversed by the incoming Trump administration. The United States maintains a comprehensive economic embargo on Cuba since 1962, making it the most enduring trade embargo in modern history. Exports to Cuba and imports from Cuba are prohibited unless licensed, and the Cuba sanctions regime is the last regime authorized under the Trading with the Enemy Act, meaning sanctions also apply to entities outside the US that are owned or controlled by US persons.

While the Yucatan Channel itself remains international waters, Cuba-US tensions affect maritime insurance rates, Coast Guard inspection intensity, and regional vessel routing patterns. Escalations create incremental transaction costs for channel transits, particularly for vessels with Cuban port calls or Cuban-controlled cargo.

Port of Progreso Expansion Activity Mexican President Claudia Sheinbaum announced major expansion plans for Port of Progreso (northern Yucatan Peninsula) in late 2024, leveraging its location along busy Gulf of Mexico trade routes. The port handles oil, containers, general cargo, and dry bulk via a 3.5 nautical mile causeway with multiple berths.

Progreso expansion signals Mexico's strategic emphasis on Gulf of Mexico trade, potentially increasing Yucatan Channel commercial traffic independent of energy flows. The port complements Mexico's Interoceanic Corridor—a 188-mile rail project connecting Pacific and Gulf coasts designed to compete with Panama Canal. Mexico aims to convert the isthmus in southern Mexico into a rail corridor that could handle up to 1.4 million twenty-foot equivalent units annually by 2033. Completed phases of the corridor could drive increased container traffic through Yucatan Channel as Asia-origin cargo discharges on Pacific coast, transloads to rail, and re-exports from Gulf ports.

Hurricane Track Probability Cones National Hurricane Center (NHC) issues 5-day forecast cones during active storms, with updates every 6 hours. When probability cones include the Yucatan Channel or northern Gulf of Mexico, energy traders prepare for potential production shut-ins and refinery evacuations. Gulf of Mexico oil platforms begin non-essential personnel evacuations 48-72 hours before projected hurricane arrival, creating leading indicators for production disruption markets.

Monitor NHC cone positions relative to key infrastructure: offshore platforms south of Louisiana concentrate in 28-29°N latitude (central/eastern Gulf), while refineries cluster along Texas-Louisiana coast. Western Gulf hurricanes (entering via Yucatan Channel's western approach) disproportionately threaten Houston-Beaumont-Port Arthur refining complex; eastern Gulf storms affect Louisiana platforms and Mississippi/Alabama refineries.

Geostrategic Notes

Gulf of Mexico as Energy Hub The US Gulf Coast processes 45-50% of total US refinery capacity, produces 15-17% of US crude oil (federal offshore waters), and hosts America's fastest-growing LNG export infrastructure. The region's energy dominance creates structural Yucatan Channel importance—any disruption reverberates through US fuel markets and global LNG supply chains.

Unlike Middle East chokepoints with geopolitical closure risk, Yucatan Channel disruptions are temporary (hurricane transit 24-72 hours, production restoration 1-3 weeks). This creates different market dynamics: short-dated futures respond to immediate storm threats, while longer-dated contracts price seasonal risk premiums rather than existential supply cutoffs.

Cuba-US Cold War Legacy The 60+ year US embargo on Cuba (formalized 1962) creates the Western Hemisphere's most enduring geopolitical friction. While the Yucatan Channel remains international waters, Cuba's northern coastline position means any Cuba-US military conflict would directly impact channel shipping. The Cuban Missile Crisis (October 1962) saw US naval forces establish blockade operations focused on the channel and Florida Strait, demonstrating wartime strategic value.

Modern US-Cuba tensions remain elevated under second Trump administration (2025), with State Sponsor of Terrorism designation, tightened travel restrictions, and expanded entity sanctions. However, military conflict probability remains extremely low, making Cuba-related channel disruption risk negligible compared to hurricane season impacts.

Venezuelan Sanctions and Caribbean Stability Venezuelan oil sanctions, escalated during Trump administration, aim to pressure Maduro government through economic isolation. Despite sanctions, Venezuelan crude continues flowing to US Gulf Coast refineries via legal Chevron licenses and gray-market shipments. As of January 2025, 250,000 bpd reached the US—the highest since 2019 sanctions began.

Ship-monitoring website TankerTrackers.com estimates there are about a dozen oil tankers idling either off the Venezuelan coast or elsewhere in the Caribbean and Gulf of Mexico, about half of which are loaded up with Venezuelan crude that suddenly has no place to go. Some tankers deactivate AIS transponders to evade sanction monitoring, creating collision risks in Caribbean and Yucatan Channel shipping lanes. Caribbean nations supporting Venezuela criticized US sanctions as destabilizing regional fuel supply and complicating debt payments. For traders, Venezuelan sanction changes represent the primary non-weather geopolitical variable affecting Yucatan Channel energy flows.

Panama Canal as Complementary Bottleneck While Panama Canal provides Pacific-Atlantic transit, Yucatan Channel enables Gulf of Mexico access without canal transits. Recent Panama Canal drought restrictions (2023-2024) reduced daily slot allocations, incentivizing alternative routing via Mexico's Interoceanic Corridor. Cargo discharging at Pacific ports (Salina Cruz) transloads to rail, traverses the 188-mile corridor to Gulf coast ports (Coatzacoalcos), and ships onward through Yucatan Channel.

Mexico aims to handle 1.4 million TEUs annually via this corridor by 2033, competing directly with Panama. Successful corridor development increases Yucatan Channel containerized cargo, diversifying the chokepoint's commodity mix beyond dominant oil/gas flows.

Historical Context

Spanish Treasure Fleet Era (1566-1790) The Yucatan Channel served as the primary return route for Spanish treasure fleets carrying New World gold, silver, and precious goods to Europe. The Spanish treasure fleet, or West Indies Fleet, was a convoy system of sea routes organized by the Spanish Empire from 1566 to 1790, which linked Spain with its territories in the Americas across the Atlantic.

The classic route for the treasure fleet in the Caribbean was through the Lesser Antilles to the ports along the Spanish Main on the coast of Central America and New Spain, then northwards into the Yucatan Channel to catch the westerly winds back to Europe. The treasure fleet, called the Plate fleet, would sail out into the Yucatan channel, where the prevailing winds and the Gulf Stream would take it along the south Florida coastline and out into the Atlantic for the trip across to Europe.

Off Cuba's western tip near the Yucatan Channel, the flota faced its moment of greatest peril, as "there were a lot of pirates hiding there waiting for them," and "that spot probably has the largest number of hurricanes in the region." The returning Spanish treasure fleet made a tempting target, although pirates were more likely to shadow the fleet to attack stragglers than to engage the well-armed main vessels.

In the 1560s, the Spanish government created a system of convoys in response to the sacking of Havana by French privateers. The period during which pirates were most successful was from the 1650s to the 1730s.

Cuban Missile Crisis Naval Blockade (October 1962) During the 13-day Cuban Missile Crisis, President Kennedy ordered naval "quarantine" of Cuba to prevent Soviet missile deliveries. The Yucatan Channel became a primary focus for US Navy operations as Soviet ships approached Cuba from Atlantic and Caribbean routes. US destroyers and aircraft carriers established intercept positions at the channel, monitoring all vessel traffic for military cargo.

The crisis demonstrated the channel's military-strategic value: controlling the Yucatan Channel effectively blockades Gulf of Mexico access from the Caribbean, isolating Cuba from western approaches while focusing enforcement resources on a single, wide chokepoint. The successful blockade contributed to Soviet decision to remove missiles, avoiding potential World War III escalation.

Hurricane History and Naming The Yucatan Channel experiences the highest hurricane frequency of any global shipping chokepoint, driven by its position in the Atlantic hurricane formation zone. Spanish treasure fleets lost numerous ships to hurricanes in the channel, with 1715 and 1733 fleet disasters representing catastrophic losses.

Modern hurricane season runs June 1 to November 30, with peak activity August 15 to October 15. 2024's Hurricane Beryl (earliest Category 5 on record, July 1) and rapidly intensifying Hurricane Milton demonstrated the region's explosive storm development potential. The Yucatan Peninsula's geography creates a "hurricane highway" as storms traverse the channel, intensify over warm Gulf waters, and strike Texas-Louisiana coasts.

Offshore Oil Era (1947-Present) Discovery of offshore oil in the Gulf of Mexico beginning with Ship Shoal Block 32 (1947) transformed the region into America's energy heartland. By the 1970s, Gulf of Mexico production exceeded 1 million bpd, growing to peak production of 1.8-2.0 million bpd in the 2010s-2020s. The Yucatan Channel became critical for tanker traffic moving crude oil and refined products between Gulf Coast refineries, Mexican oil fields (Cantarell, Ku-Maloob-Zaap), and Caribbean markets.

Hurricane impacts on offshore platforms created recurring supply disruptions: Hurricane Katrina (2005) shut in 1.4 million bpd for weeks; Hurricane Ivan (2004) damaged 7 platforms and 4 drilling rigs; Hurricane Ike (2008) destroyed 49 platforms. Modern platforms incorporate enhanced hurricane resilience, but production shut-ins remain standard practice when storms threaten, directly linking Yucatan Channel weather patterns to US energy supply.

Pemex Nationalization and US-Mexico Energy Trade Mexico nationalized oil in 1938, creating Pemex as state monopoly. For decades, Mexico ranked among top-5 US oil suppliers, with exports exceeding 1 million bpd in the 2000s. All Mexican crude destined for US Gulf Coast refineries transits the Yucatan Channel, making the chokepoint central to US-Mexico energy interdependence.

Recent Pemex production declines—from 2004 peak of 3.4 million bpd to 2024's 1.6 million bpd—reduced Yucatan Channel energy traffic. January 2025's 44% export collapse to 532,404 bpd marked historic lows, with structural decline driven by underinvestment, reservoir depletion, and operational challenges. If Pemex production continues declining, Yucatan Channel's energy significance diminishes relative to US domestic production (Permian Basin) and Canadian imports (via pipeline, avoiding channel transit).

Seasonality & Risk Drivers

Hurricane Season (June 1 - November 30) Peak Atlantic hurricane activity concentrates in August-October, with the Yucatan Channel experiencing maximum disruption risk during these months. Statistical climatology shows September as peak month for Gulf of Mexico landfalls, followed by August and October. July hurricanes remain rare but can occur, as 2024's Beryl demonstrated.

Traders structure hurricane markets around monthly granularity: "Will any hurricane cause 200,000+ bpd Gulf production shut-ins in September 2025?" captures peak season risk, while "Q3 2025 aggregate hurricane disruption days" enables broader exposure without single-month timing risk. Seasonal forecasts published in May create initial pricing, with updates in August (peak season entry) driving volatility.

Summer Driving Season (Memorial Day - Labor Day) US gasoline demand peaks during summer driving season, increasing Gulf Coast refinery runs to maximum utilization rates (94-96%). Refineries prioritize gasoline production over distillates, requiring optimal crude slate diversity (light shale, medium imports, heavy Canadian). Yucatan Channel disruptions during May-August constrain Mexican crude imports exactly when refiners seek flexibility, tightening gasoline markets and driving regional price premiums.

Traders monitor seasonal gasoline crack spreads (gasoline price minus crude oil price) as proxy for refinery profitability and supply adequacy. Widening cracks during summer + Yucatan Channel disruptions = compounded supply stress, offering structured trade opportunities across energy markets.

Mexican Political and Energy Policy Cycles Mexico's 6-year presidential terms (sexenios) create policy volatility affecting Pemex operations and export commitments. President Claudia Sheinbaum (2024-2030) continues predecessor Andrés Manuel López Obrador's nationalist energy policies, prioritizing Pemex over private investment. This structural approach sustains production decline trends absent major policy reversal.

Monitor Mexican government energy policy announcements, Pemex investment budgets, and private sector participation rules. Policy shifts toward liberalization (2013 energy reform model) would attract investment, potentially stabilizing or reversing Pemex production declines and increasing Yucatan Channel crude traffic. Continued nationalist policies accelerate decline trajectory and channel traffic reductions.

Venezuela Sanctions Cycle Venezuelan oil sanctions tighten and relax in waves corresponding to US political cycles and Venezuela's internal developments. Trump administration (2017-2021, 2025-present) pursues maximum pressure; Biden administration (2021-2025) showed modest sanctions relief. This creates periodic flux in Venezuelan crude volumes transiting Yucatan Channel toward Gulf Coast refineries.

Key inflection points: OFAC General License modifications, presidential executive orders (March 2025 tariff threat on countries importing Venezuelan oil), and opposition/Maduro government negotiations. Sanctions escalation reduces channel traffic; sanctions relief increases traffic. Track Treasury Department announcements and State Department Venezuela policy statements for leading indicators.

How to Trade It on Prediction Markets

Binary Markets

"Will a hurricane cause 250,000+ bpd Gulf of Mexico crude production shut-ins during August-September 2025?" Resolution: EIA weekly petroleum status reports. 250,000 bpd represents 14% of federal Gulf waters production, indicating major hurricane impact. 2024's September averaged 295,000 bpd shut-ins, establishing precedent for severe scenarios. Position based on NOAA seasonal forecasts, sea surface temperature anomalies, and August storm development patterns.

"Will Mexican Pemex crude exports to the US drop below 300,000 bpd in any month during Q2 2025?" Resolution: Pemex monthly petroleum statistics. January 2025's 320,944 bpd to Americas marked historic lows; sustained decline below 300,000 bpd confirms structural production crisis. Monitor Pemex CEO statements, Mexican energy ministry production forecasts, and Gulf Coast refiner complaints about crude quality.

"Will the US Coast Guard announce additional maritime restrictions for Cuba-transit vessels by December 2025?" Resolution: Federal Register Coast Guard notices. March 2025 entry conditions for Cuba-origin vessels established precedent. Further restrictions signal escalating Cuba-US tensions affecting Yucatan Channel operations. Track State Department sanctions updates and Cuba policy statements.

"Will Venezuelan crude oil imports to the US exceed 300,000 bpd in any month during 2025?" Resolution: EIA import data. January 2025's 250,000 bpd represented post-2019 peak despite sanctions. Exceeding 300,000 bpd indicates major sanctions relief or enforcement lapses. Monitor OFAC license modifications and presidential energy policy statements.

"Will Yucatan Channel vessel transits decline 10%+ year-over-year during hurricane season (June-November) 2025?" Resolution: IMF PortWatch data. 10% decline from 2024's ~16,000 annual transits (pro-rated for 6 months) indicates major hurricane disruption or Mexican oil export collapse. Combines natural disaster risk with structural energy trade decline.

Scalar Markets

"Gulf Coast Refinery Utilization Rate — August 2025 Monthly Average" Range: 70%-96% (100 = maximum sustainable utilization) Resolution: EIA weekly petroleum status reports, averaged across 4-5 weeks Notes: Normal August utilization runs 92-95%; hurricane disruptions drive rates below 88%; severe events like 2024 hurricanes push rates to 80-85%. Short positions pay when major storms strike.

"Mexican Pemex Crude Exports to US — Q3 2025 Quarterly Average (thousand bpd)" Range: 150-450 thousand barrels per day Resolution: Pemex monthly statistics, averaged across July-September Notes: January 2025's 321k bpd established near-term baseline; structural decline suggests Q3 could average 280-320k bpd. Further quality problems or production declines drive lower outcomes.

"Yucatan Channel Hurricane Disruption Days — 2025 Hurricane Season Total" Range: 0-30 days (days with measurable vessel traffic reduction over 15%) Resolution: IMF PortWatch transit data compared to baseline Notes: 2024 experienced approximately 12-15 disruption days across Beryl, Milton, and unnamed storms. Severe seasons (2005, 2017) exceeded 20 days. Markets price probability distribution across range.

"WTI-Brent Crude Spread — Q3 2025 Quarterly Average ($/barrel)" Range: -$6 to +$2 per barrel (negative = WTI discount to Brent) Resolution: Bloomberg or CME settlement prices, averaged across quarter Notes: Yucatan Channel disruptions reducing Mexican/Venezuelan imports tighten spread toward zero as refiners increase domestic crude processing. Current levels around -$4/bbl; disruptions drive toward -$2/bbl or narrower.

"Venezuela-to-US Crude Shipments via Yucatan Channel — 2025 Annual Total (million barrels)" Range: 50-120 million barrels (equivalent to 137,000-329,000 bpd average) Resolution: Ship-tracking data (TankerTrackers.com) or EIA import statistics Notes: Captures Venezuela sanctions uncertainty. Tightened enforcement drives lower outcomes; sanctions relief or November 2024 election impacts drive higher outcomes.

Index Basket Strategies

Gulf Coast Energy Resilience Basket Components: Gulf Coast refinery utilization inverse (30%), Yucatan Channel hurricane disruption days inverse (25%), Mexican Pemex export volumes (25%), WTI-Brent spread (20%) Rationale: Captures multiple dimensions of Gulf Coast energy supply stress—refinery shutdowns, weather disruptions, feedstock imports, and price signals. Long basket = betting on energy system stress; short basket = betting on operational stability.

Hurricane Season Volatility Strategy Long hurricane disruption days + long Gulf Coast refinery utilization inverse + long gasoline crack spreads + short natural gas storage levels Rationale: Pure play on hurricane season impacts across energy supply chain—production shut-ins, refinery closures, product supply tightness, and competing fuel sources. Seasonal trade structure: enter June, hold through October, exit November.

Sanctions Regime Change Basket Long Venezuelan imports to US + long Cuba-US maritime restrictions inverse + short WTI-Brent spread + long general risk appetite measures Use case: Tail risk hedge for major sanctions policy shifts (Trump vs Democratic administration), capturing sudden changes in Caribbean energy flows and geopolitical normalization.

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Disclaimer

This content is for informational and educational purposes only and does not constitute financial advice. Ballast Markets is not affiliated with PolyMarket or Kalshi. Data references include IMF PortWatch (accessed October 2024), US EIA, NOAA, and maritime intelligence sources current as of October 2025. Trading involves risk. Hurricane predictions and geopolitical developments may differ significantly from actual outcomes. All data regarding effective tariff rates, port traffic, and chokepoint volumes comes from verifiable official sources; where estimates are provided, they are clearly identified as such.