Strait of Hormuz traffic returns to normal by end of June?
I assess a modestly below-even chance that IMF Portwatch will publish a 7-day moving average >= 60 for Strait of Hormuz transit calls by June 30, 2026, assigning a 45% probability to Yes based on the balance of normalization drivers and persistent security/operational frictions.
Analysis
We lack live IMF Portwatch data in this briefing, so the assessment relies on structural patterns, recent persistent risks around the Gulf, and the specific mechanics of this market (a single qualifying 7-day moving average value at or above 60 suffices and revisions within the interval count). If recent 7-day averages are already close to 60, a short surge or an upward revision could trigger a Yes outcome quickly; if the current 7-day average is well below the threshold, the requirement of sustained elevated daily calls to lift the moving average makes a late recovery less likely within the remaining month.
Historically, the Strait of Hormuz carries a large share of commercial and tanker transits, so a 60-call 7-day average is a reasonable representation of a normal or near-normal throughput level, not an extremely high outlier; however, geopolitical frictions, insurance premiums, and commercial rerouting that have been observed in prior years can depress daily counts for extended periods. The market price (Yes ~38.5%) reflects participant skepticism about a full normalization before the June 30 deadline, but does not fully incorporate tail-probability sources such as retroactive data revisions or a single-week rebound caused by rapid operational changes.
Operational and commercial incentives point both ways: higher Gulf crude export quotas, any agreements reducing attacks or harassment, and improving insurance conditions would quickly restore commercial routing and push daily transits upward, increasing the chance of hitting the 60 threshold at least for a 7-day window. Conversely, ongoing or renewed security incidents, continued high bunker and insurance costs that favor longer but safer detours, or a downturn in broader trade volumes would maintain lower transit counts and make the threshold unlikely to be reached in the short remaining timeframe.
Given the asymmetric nature of the resolution (only one qualifying 7-day average needed) and the possibility of post-publication upward revisions within the market window, I tilt my estimate modestly above the market-implied 38.5% to 45%, reflecting both realistic chances for a short-term recovery or revision and substantial downside risks that keep No the more likely single outcome by June 30.
Arguments
For
- Only a single 7-day moving-average publication at or above 60 is required, so a short rebound or upward revision can resolve the market to Yes.
- If regional tensions ease or a ceasefire/de-escalation measure is implemented, shipping companies can rapidly resume normal Hormuz routings.
- Higher Gulf export volumes or resumed tanker loadings from producers could push daily transit counts up quickly over a week.
- Seasonal increases in global shipping demand and chartering activity in late spring/early summer could temporarily lift transit numbers.
Against
- Ongoing security threats and recent multi-year patterns of incidents make operators cautious about immediate return to pre-crisis routing.
- Economic incentives to avoid the Strait (higher insurance and rerouting costs) can keep transit numbers suppressed even if security improves modestly.
- If current 7-day averages are materially below 60, the short remaining calendar window makes it difficult to raise the moving average enough for qualification.
- Persistent reporting lags or data gaps could delay recognition of any recovery or leave the market without qualifying published values by the deadline.
Key drivers
- Diplomatic and military de-escalation in the Gulf region that reduces attacks and harassment of merchant ships.
- Oil export and tanker scheduling decisions by Gulf producers that increase the number of transits through Hormuz.
- Insurance premiums and war-risk surcharges falling enough to make direct Hormuz transits economically preferable versus longer detours.
- Timing and size of commercial shipping seasonal cycles and chartering demand that could temporarily raise daily transits.
- IMF Portwatch reporting practices and any in-window data revisions that could retroactively raise published moving averages.
Risk factors
- Renewed security incidents or spike in hostile actions against shipping will suppress transits and deter direct routing.
- Sustained high insurance costs and war-risk premiums that keep owners routing ships around Africa or otherwise avoiding Hormuz.
- An economic slowdown that reduces global demand for shipments passing through the Strait, lowering daily call counts.
- Delays or gaps in IMF Portwatch reporting that create uncertainty or prevent late recoveries from being recorded in time.
- Operational constraints such as port congestion, sanctions, or embargoes that reduce the number of scheduled transits.
Scenarios
Best case
A rapid de-escalation occurs and/or Gulf producers ramp up exports while insurance premiums drop, producing a sustained one-week spike in daily transit calls that yields a 7-day moving average at or above 60 before June 30, with possible supporting upward revisions in IMF Portwatch data.
Most likely
Some improvement in traffic occurs but unevenly and not sustained enough to push the 7-day moving average to 60 before the deadline, though the chance of a last-minute short qualifying run or an in-window upward revision leaves a meaningful minority probability for Yes.
Worst case
Security incidents or renewed attacks, combined with sustained high insurance costs and continued diversion of traffic around Africa, keep daily transit calls well below the 60 threshold and IMF Portwatch does not publish any qualifying 7-day average by the June 30 cutoff.
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