Strait of Hormuz traffic may not return to normal for 12 months or more, according to prediction markets

• Odds of the Strait reopening by July 2027 fell to 47% from 70% in two days, with only 38% chance of normalization in 2026 and 48% by April 2027
• Market contract resolves when seven-day moving average of transit calls exceeds 60, as verified by IMF Portwatch data
• Iranian-backed Houthi rebels in Yemen attacked two Saudi oil tankers in the Red Sea, adding complexity to reopening timeline, while Pakistan pushes for peace talks with support from China

Summary: Strait of Hormuz Closure Expected to Extend Into 2027

Prediction markets on Kalshi show sharply declining odds that maritime traffic through the Strait of Hormuz will return to normal soon, with probabilities falling below 50% across multiple timeframes as of Friday afternoon.

Key Data Points:

• Odds of normal traffic resuming by July 2027 plummeted to 47% from nearly 70% in just two days
• Chances of reopening in 2026 stand at only 38%
• Probability of normalization before April 2027 sits at 48%
• Markets use a threshold of 60+ transit calls on a seven-day moving average (IMF Portwatch data) to define "normal"

Geopolitical Developments:

The sharp decline follows U.S. military strikes against Iranian targets, with President Trump signaling plans for a "massive attack" against Iran in a Thursday interview. Iranian-backed Houthi rebels in Yemen have claimed responsibility for attacks on two Saudi oil tankers in the Red Sea, adding complications to the reopening timeline. Trump has threatened to hold Iran accountable for any additional Houthi attacks.

Market Implications:

Matt Smith, Kpler's director of commodity research, confirmed expectations are now "pushing that reopening into next year." The Strait of Hormuz is a critical chokepoint for global oil shipments, and extended closure would significantly impact energy markets and supply chains.

Some diplomatic efforts are underway, with Pakistan reportedly pursuing peace talks between the U.S. and Iran, supported by China, according to Friday reports citing Pakistani sources.

The deteriorating outlook suggests prolonged disruption to global maritime trade and energy flows.