Strait of Hormuz traffic returns to normal by December 31?
The Strait of Hormuz is still operating well below normal levels, and the 60-transit weekly average threshold looks difficult to reach without a meaningful and sustained security improvement. I see a below-coin-flip chance of normalization by year-end, with the market likely a bit too optimistic relative to the latest traffic data.
Analysis
The latest traffic readings point to a strait that is still materially disrupted rather than normalized. Recent reported daily transit counts are far below the pre-crisis baseline, with some measures around the high teens to low 30s versus a normal level closer to the high 80s, which means the market still needs a very large and sustained improvement to clear the 60-ship seven-day average threshold. That gap is not small: it implies not just a rebound from current conditions, but a near-doubling or more in traffic that must persist long enough to lift a seven-day moving average above the trigger level.
The strongest argument for Yes is that shipping volumes can recover relatively quickly if the security environment improves. Operators, insurers, and naval escorts can change routing behavior faster than many other sectors, so if tensions ease or protective measures make passage feel materially safer, transit counts could jump sharply before year-end. The market’s heavy volume and near-even pricing also suggest that many traders believe some form of reopening or normalization is plausible within the remaining five months.
The stronger argument against Yes is that the current evidence still looks like an extended disruption rather than a temporary dip. Reports continue to describe cautious routing, escort dependence, and persistent security concerns, all of which tend to suppress traffic for longer than headlines might imply. Because the resolution requires a sustained seven-day average at or above 60, brief spikes or partial reopening would not be enough; the market needs a stable, broad-based return of commercial flows, and that is a demanding bar given the present conditions.
Overall, I would price this as a meaningful but not favored outcome. The remaining time is sufficient for a recovery if geopolitical conditions improve decisively, but the latest data do not yet show the kind of upward trajectory that usually precedes a clean normalization event. As a result, I lean to No, though not by a wide margin, because the event is still highly sensitive to a fast-changing regional security backdrop.
Arguments
For
- Arguments for Yes: Shipping traffic can rebound quickly once operators and insurers regain confidence, so a normal-level reading is feasible if the security situation improves.
- Arguments for Yes: There is still enough time in 2026 for a sustained traffic recovery, and the market is already pricing a substantial chance of that outcome.
Against
- Arguments against Yes: Current traffic remains far below normal, and the gap to a 60-transit seven-day average is still very large.
- Arguments against Yes: The market needs a sustained and broad recovery, but recent reports still describe caution, disruption, and security-driven constraints.
Key drivers
- Current transit volumes are far below the 60-ship threshold, so the market needs a large sustained rebound rather than a modest improvement.
- The remaining time until year-end is enough for a rapid normalization if security conditions improve quickly.
- Commercial operators and insurers can react quickly to reduced risk, which makes a sharp traffic recovery possible.
- Persistent caution, escorting, and rerouting behavior can keep the seven-day average suppressed even if some ships resume transits.
Risk factors
- A sudden de-escalation in regional tensions could cause traffic to normalize faster than expected.
- A short-lived spike in transits might be strong enough to push the seven-day average above 60 even if conditions later soften.
- Escalation, new warnings, or fresh attacks could keep volumes depressed through year-end.
- Data revisions or reporting quirks could briefly change the published moving average near the threshold.
Scenarios
Best case
Regional tensions ease decisively, insurers and shipping lines return in force, and daily transits climb quickly enough for the seven-day average to break 60 and hold there before year-end.
Most likely
Traffic improves somewhat from current depressed levels but remains too volatile or too low to produce a sustained seven-day average of 60 or more before year-end.
Worst case
Security concerns persist or worsen, commercial carriers continue to avoid the strait, and traffic stays well below the threshold through December 31.
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