Kalshi traders think gas prices will stay higher for longer as U.S.-Iran tensions heat back up

• Traders assign 39% odds that gas prices will top $3.75 per gallon by Nov. 3, nearly double the 22% probability before the Middle East conflict escalated
• U.S. oil prices spiked to $75 per barrel from around $68 on Monday due to tensions, though WTI crude eased back below $72 per barrel on Thursday
• Despite higher price expectations, traders give only 43% odds that gas prices will reach new 2026 highs above $4.60, suggesting limited upside from current levels

Summary: Gas Prices Expected to Remain Elevated Amid U.S.-Iran Tensions

Key Market Development:

Traders on prediction platform Kalshi are significantly increasing their expectations for sustained higher gas prices following renewed U.S.-Iran conflict, with implications for the November 3 election day pricing.

Key Probabilities:

• 75% chance gas prices will exceed $3.50/gallon on Election Day (up from 37% pre-conflict)
• 39% probability of prices above $3.75/gallon (up from 22%)
• 43% chance of gas reaching $4.60 this year (up from 33%)

Current Market Data:

• National average gas price: $3.84/gallon as of Thursday (up 5 cents day-over-day)
• WTI crude oil: Rose to $75/barrel from $68 on Monday, before easing to below $72/barrel Thursday
• Pre-conflict baseline: Gas prices were below $3/gallon before U.S.-Iran hostilities
• 2026 high: $4.56/gallon on May 21

Market Context:

The escalation in Middle East tensions has driven oil prices higher, with uncertainty surrounding the conflict's duration and impact on supply. The timing is particularly significant with the proximity to Election Day, as gas prices often influence voter sentiment.

Outlook:

While traders expect sustained elevation in gas prices through the election period, they do not anticipate a return to 2026 highs. The conflict remains ongoing with no clear resolution timeline, keeping upward pressure on energy markets.

Data Source: Pricing resolved using AAA data.

*Note: Article contains disclosure of commercial relationship between CNBC and Kalshi.*