Wall Street’s prediction markets see a long road back for the Strait of Hormuz

Wall Street traders are pricing a slow return to normal shipping through Hormuz. Kalshi contracts were below 50% on Friday afternoon.

The chance of regular traffic by July 2027 fell to 47% from nearly 70% two days earlier. The drop came as the United States completed a 13th straight night of attacks on Iranian sites and Trump told Axios that another “massive attack” could follow.

Shorter-term prospects appear even grimmer. According to Kalshi, Hormuz has a 38% chance of having regular ship traffic before the year’s end. At best, there is a 48% probability that the region will recover by April 2027. The contract comes into effect only if data from IMF PortWatch indicates an average of more than 60 ships per seven days. This number currently stands at around 12.

Fighting closes more shipping space across Hormuz and the Red Sea

Diplomacy continues while military pressure grows. Reuters, part of Thomson Reuters (NYSE: TRI; TSX: TRI), reported Friday that Pakistan is pressing Washington and Tehran to restart talks, with China also backing the effort. The report cited three Pakistani officials. Trump wrote on Truth Social, owned by Trump Media & Technology Group (NASDAQ: DJT), that Iran would face responsibility for fresh Houthi attacks.

Tankers are being targeted across several war zones as governments and armed groups use trade routes against rivals. Iran has increased strikes on vessels near Hormuz this month while trying to control the oil corridor. Houthi forces in Yemen added another front this week. They fired at two Saudi tankers in the Red Sea after announcing a shipping ban against Riyadh.

Ukraine claims that it has destroyed over 150 vessels involved in the Russian “shadow fleet.” According to the Kyiv Post, the vessels include oil tankers and other types of vessels operating in the Black Sea and Sea of Azov regions. This operation is unrelated to the Hormuz, although it does pose additional risks.

Shipping through Hormuz had started to recover after Washington and Tehran signed a June 17 agreement to reopen the passage. That improvement did not last. Vessel activity dropped again once the truce failed and attacks returned.

The International Maritime Organization says 61 merchant ships have been hit in the Persian Gulf, Hormuz, and the Gulf of Oman since March 1. At least 17 crew members have died, and dozens have been injured. This month alone, attackers struck at least 12 tankers near Hormuz, killing two seafarers as the U.S.-Iran fight grew worse.

Oil desks raise forecasts as the Hormuz disruption spreads

The Red Sea now creates another problem for Saudi exports. Riyadh redirected millions of barrels each day through a pipeline to its western coast because Hormuz became too dangerous. Those cargoes still must pass Bab el-Mandeb, the narrow channel linking the Red Sea and the Gulf of Aden.

That route never fully recovered from the Houthi shipping campaign between 2023 and 2025. The group attacked vessels over Israel’s war in Gaza, and Bab el-Mandeb traffic fell sharply. The latest attacks on Saudi tankers threaten oil meant to avoid Hormuz.

Rapidan Energy Group upgraded its prediction on the price of Brent crude oil following the breakdown of the negotiations between the U.S. and Iran. According to the company, the price of Brent is expected to be at around $100 per barrel past July and through the end of the year.

Rapidan said Brent could reach the middle of the $100 range within months if hopes for another agreement disappear and traders focus on tighter supply. They wrote:

“The collapse of the US-Iran MOU has fundamentally changed our outlook. The key question now is whether both sides continue to limit strikes to military targets or allow the conflict to expand to civilian infrastructure, particularly power and desalination facilities.”

Goldman Sachs Group (NYSE: GS) has also raised the possible ceiling. Its analysts said continuing unrest could send Brent above $120 a barrel. The contract crossed $100 on Thursday for the first time in two months and is heading toward a monthly gain of more than 30%.

Rapidan now expects the worldwide oil supply to stay below demand for at least one more year. Weak buying from China may reduce some pressure. With Brent between $90 and $100, Beijing could keep using stored crude at a rate below 500,000 barrels a day through the end of 2026. Rapidan expects China to start rebuilding those reserves early next year.