How the contract works
A contract on this question settles at $1 if IMF PortWatch publishes a 7-day moving average of Hormuz transit calls at or above 60 on any date up to 31 December 2026, and at nothing if that threshold is never reached by then. The price at any moment reflects what buyers and sellers currently think the chance of that happening is: a contract trading at 0.30, for example, would imply the market sees roughly a three-in-ten chance of a return to normal traffic levels by year-end. Kalshi settles this market using IMF PortWatch data, with a small grace period for the data to be published after the 31 December cutoff. A position bought today does not have to be held to settlement; it can be sold at whatever price the market offers between now and 1 January 2027.
Yes13%
No87%
Probability
How the price has moved
The contract was first recorded at 46% on 29 July 2026 and climbed as high as 61% before pulling back to its current level near 40%, a round trip of roughly 20 percentage points within a market that has logged just 58 price observations. That pattern points to a market reacting to specific pieces of news, most plausibly shifting assessments of Iran-Israel de-escalation, rather than a steady drift as more information accumulates. The most recent 24 hours brought a 2-percentage-point increase, a modest recovery that has not undone the larger pullback from the 61% peak; no single publicly reported trigger for that peak or the subsequent decline is confirmed here, so the honest reading is that this market remains highly reactive to Gulf security headlines rather than settled on a trend.
Analysis
Context
The Strait of Hormuz is the narrow channel between Iran and Oman through which roughly a fifth of the world's seaborne oil and a large share of global liquefied natural gas exports pass. It has no practical alternative route for Gulf producers, which is why any disruption there moves oil prices and shipping insurance markets within hours. Since mid-2025, repeated rounds of confrontation between Israel and Iran, including strikes reported near shipping-adjacent infrastructure and Iranian rhetoric about closing the Strait, have periodically pushed vessel traffic below its long-run average as insurers raised war-risk premiums and some operators paused transits or rerouted.
The market defines a return to "normal" using a specific data point: a 7-day moving average of daily transit calls, covering container ships, dry bulk carriers, roll-on/roll-off vessels, general cargo and tankers, published by IMF PortWatch. A reading at or above 60 on any single day before the end of 2026 would count as normal. That threshold reflects roughly what daily transit volumes looked like before the disruptions began.
This is a live geopolitical question with no fixed resolution path other than what actually happens in the water and what IMF PortWatch reports. The market settles based on that published data, not on news headlines about ceasefires or diplomatic statements, which is an important distinction for anyone reading this as a proxy for the security situation rather than the shipping data itself.
The market opened at 46% on 29 July 2026, the first day it was recorded, and has since traded in a wide band between 46% and 61% before settling near its current level around 40%. That range of more than 15 percentage points in a matter of days, on a market with just 58 recorded price observations so far, says this is a young and thinly traded contract still finding its footing rather than one with a settled consensus. A swing of that size in a market this new typically reflects reaction to specific news, not a gradual repricing of a stable situation.
The rise toward 61% likely reflects moments when de-escalation looked plausible, followed by a pullback toward 40% as renewed uncertainty about Iran's posture or a fresh incident near the Strait reasserted itself; the most recent 24-hour move, a gain of 2 percentage points, suggests a modest tilt back toward normalization at the time of writing, though a single day's move in a market this volatile should not be read as a turning point on its own. All the volume so far, $1,575,777, sits on a single venue, Kalshi, so there is no cross-venue spread to check for disagreement; the entire signal comes from how this one order book has moved.
The substance behind the price is the Iran-Israel confrontation that began in mid-2025 and the knock-on effect on commercial shipping. Insurers price war risk into Gulf transits in real time, and elevated premiums are often enough on their own to reduce transit counts even without an actual closure, because some operators choose to wait out a crisis rather than pay the added cost. A resolution to Yes therefore requires not just an absence of new military incidents but a period of calm long enough, and credible enough, for insurers to bring premiums back down and for shipping lines to resume normal routing and scheduling. That kind of confidence typically lags the underlying political event by weeks, not days.
Historical precedent cuts both ways. After earlier Gulf tanker incidents in 2019 and after Houthi attacks disrupted Red Sea shipping from late 2023, traffic patterns took months to fully normalize even once the acute threat receded, because carriers and insurers move cautiously. That argues against a fast return to a 60-plus daily average unless there is a clear and durable de-escalation well before the end of 2026.
What moves the probability
Iran-Israel ceasefire durability
Any sustained halt in strikes between Iran and Israel is the single largest lever on this question, because it directly affects whether insurers and shipping lines treat the Strait as safe to transit routinely. A durable pause pushes the probability of Yes up; any resumption of strikes near the Gulf pushes it sharply down.
War-risk insurance premiums
Lloyd's-linked war-risk premiums for Hormuz transits rise fast during confrontations and fall more slowly afterward, since insurers wait for a track record of calm before repricing. Elevated premiums alone can keep some carriers away even without new incidents, which is why traffic can lag the headlines by weeks.
IMF PortWatch data timing
Because the resolution depends on a specific published data series rather than news reports, any lag or gap in IMF PortWatch's publication schedule near the 31 December 2026 cutoff could affect whether a qualifying reading appears in time, independent of the actual state of shipping.
US and allied naval posture in the Gulf
Increased US Fifth Fleet activity or allied naval escorts can either reassure shippers enough to resume normal transits or signal continued risk depending on the context, so statements and deployment changes from US Central Command are a direct input to carrier decisions.
Iranian rhetoric on closing the Strait
Iranian officials have periodically raised the possibility of closing the Strait during past periods of tension; any renewed formal threat, even without action, tends to spike insurance costs and depress transit counts within days.
The case for
- A durable ceasefire between Israel and Iran, sustained through the second half of 2026, would give insurers grounds to lower war-risk premiums back toward pre-crisis levels.
- If premiums fall and no new incidents occur near the Strait, shipping lines would likely resume full scheduling well before the 31 December 2026 deadline, since Hormuz has no viable alternative route for Gulf oil exports.
- IMF PortWatch has tracked transit calls through past disruptions and shown traffic capable of rebounding once the underlying security situation stabilizes, as seen in other chokepoints after acute crises passed.
- A resolution to Yes only requires one qualifying seven-day average reading above 60 at any point before the cutoff, not sustained normalization through year-end, which lowers the bar somewhat.
The case against
- Renewed strikes or a fresh incident involving a tanker or naval vessel near the Strait at any point before December 2026 would likely reset insurance premiums higher and delay any recovery in transit counts.
- Insurers historically take longer to lower war-risk premiums than they take to raise them, meaning even a ceasefire announced in mid-2026 might not translate into normalized traffic by the 31 December deadline.
- Iran has periodically threatened closure of the Strait during past standoffs, and any repeat of that rhetoric tends to depress carrier activity even without a physical blockade.
- The market's own volatility, swinging between 46% and 61% within days, suggests traders see the underlying security situation as genuinely unresolved rather than trending clearly toward calm.
What to watch
The most direct signal will be IMF PortWatch's own published transit-call data, updated regularly and the sole basis for settlement. Beyond that, watch for any formal ceasefire or diplomatic agreement between Israel and Iran, statements from Lloyd's or major marine insurers on Gulf war-risk premiums, US Central Command deployment changes in the Persian Gulf, and any renewed Iranian statements about the Strait itself. A qualifying seven-day average of 60 or more transit calls on even a single day before 31 December 2026 would resolve this Yes regardless of what happens afterward.