Traders on the Kalshi platform have reported that traffic in the Strait of Hormuz, one of the world's most crucial maritime passages, is not expected to return to normal until next July. The likelihood of traffic returning to its usual state has fallen to below 50% after the United States and Iran extended their truce without revealing any new agreements regarding the opening of the strait or the end of the US naval blockade.
On Thursday, former US President Donald Trump threatened to "shoot and kill" any boat laying mines in the strait, escalating tensions further. At the same time, oil prices surged again, with Brent crude exceeding $100 per barrel.
Event Details
Forecasts from the Kalshi platform indicate that traders believe there is only a 42% chance for normal traffic to resume through the strait by June 1, increasing to 59% by July 1 and 61% by August 1. The normal flow of traffic, according to Kalshi contracts, is defined as the seven-day moving average of transit calls through the strait based on data from IMF PortWatch.
On the Polymarket platform, traders estimate a 45% chance for traffic to return to normal by the end of May and 67% by the end of June. Notably, traffic through the strait remains low, with only eight vessels crossing on Wednesday, including three oil tankers, according to data from LSEG. Before the war, traffic typically included over 100 ships daily.
Background & Context
The Strait of Hormuz is a vital point in global trade, with approximately 20% of the world's oil passing through it. Historically, the strait has witnessed ongoing tensions between Iran and the United States, especially following the US withdrawal from the Iranian nuclear deal in 2018. These tensions have led to escalated military and economic conflicts in the region, significantly affecting traffic and trade.
Recently, Iranian Parliament Speaker Mohammad Baqer Qalibaf stated that the strait would not be reopened as long as the US naval blockade remains in place. These statements reflect the significant challenges facing efforts to resolve the conflict and reopen the strait, which could impact energy flows and production in the region.
Impact & Consequences
UBS analyst Ulrike Hoffman-Burchard predicts that the reopening of the strait "remains a distant prospect," noting that these developments indicate the difficulty of resolving the conflict. Continued high energy prices could have a more significant negative impact on global economic growth, increasing the risks of recession.
Forecasts suggest that traders are placing the odds of a recession in the US in 2026 at less than 26%, a significant drop from around 37% at the end of March. This change reflects growing concerns about economic stability under current conditions.
Regional Significance
The Arabian Gulf region is one of the most affected areas by the tensions in the Strait of Hormuz, as many Arab countries rely on oil flows from this strait. Ongoing tensions could lead to rising oil prices, impacting the economies of oil-consuming countries in the region.
In conclusion, the tensions in the Strait of Hormuz remain a significant concern for many Arab nations, as any escalation in the conflict could directly affect the stability of the regional economy.