Prediction Markets Keep Betting The Strait of Hormuz Will Reopen But What If This Is the New Normal?

U.S. President Donald Trump’s declaration that the ceasefire with Iran was “over” sent traders on prediction markets scrambling to revise their expectations for when traffic through the Strait of Hormuz might return to normal.

Kalshi, which defines “normal” traffic as a seven-day moving average of more than 60 transit calls based on IMF PortWatch data, has repeatedly pushed back that timeline since the conflict between the U.S. and Iran began.

• In March, CNBC reported that Kalshi contracts priced a highly optimistic 76% probability that traffic would normalize by July 1 and a 67% probability by June 1.
• In April, Kalshi contracts again indicated a relatively quick rebound, pricing in a 59% probability that traffic would normalize by July 1 and a 61% probability by August 1.
• In May, market expectations shifted into the fall, with Kalshi contracts for a September 1 normalization dropping to 54% odds.
• In June, Kalshi contracts priced in a 66% chance that traffic would not normalize before 2027. A temporary improvement in expectations followed reports of an interim agreement, briefly pushing October 1 normalization odds above 50% before sentiment reversed again.
• In July, those earlier relatively optimistic forecasts evaporated. Kalshi forecasts now reflect only a 44% probability of normal traffic resuming by December 1, with January 2027 becoming the first contract date where normalization is priced as more likely than not (53%).

For five months in a row, prediction markets have insisted that normal traffic is merely months away and treated each disruption as a temporary shock. A striking pattern has emerged: Kalshi forecasts have repeatedly underestimated how long the disruption would last, largely because they assume that commercial traffic through the Strait will revert back to the conditions that prevailed prior to the U.S.-Iran war’s onset.

But what if the current cycle of tit-for-tat military strikes—between the U.S. and its regional allies on one side and Iran and its proxies on the other with the Strait caught in the cross-fire—is the new normal?

If so, the consequences would extend far beyond prediction markets.

Insufficient workarounds: Governments and energy companies would accelerate investment in new overland pipelines and rebuilding strategic energy reserves. However, none of these options would be sufficient to replace Strait traffic entirely and some carry similar vulnerabilities. For example, Saudi Arabia’s East-West Pipeline and the UAE’s Habshan–Fujairah pipeline were both attacked by Iran in April and May of 2026, respectively.

Higher energy prices: A permanently unstable Strait of Hormuz would embed a geopolitical risk premium into global oil and natural gas markets. Even when no tankers are attacked, shippers, insurers, and commodity traders would continue pricing in the possibility that they could be. The result is structurally higher energy prices, not just temporary spikes whenever fighting erupts again.

Higher prices across the economy: Rising energy prices increase the cost of manufacturing, transportation, food, air travel and virtually every product that depends on global shipping. Inflation becomes harder for central banks to tame with interest rate hikes because geopolitical events rather than excess demand is the driving factor.

A new energy calculus. Persistent instability would strengthen the long-term case for renewables, nuclear power and electrification by making energy security a strategic and national-security priority rather than just a climate goal. But in the short run, governments could also lean harder on domestic oil, gas and even coal to avoid shortages, creating a transition in which both clean and fossil energies receive greater investment.