Strait of Hormuz traffic returns to normal by December 31?

The latest context points to a strait that is still operating well below normal, with recent reporting showing only thin traffic and the most recent referenced Portwatch reading at 34 commercial vessels on July 5. That is materially below the market’s trigger of a 7-day moving average of 60 or more, and the gap is large enough that a single strong day or two would not be sufficient. Because the resolution requires a sustained 7-day average, the market needs not just a rebound in activity but a durable return to regular commercial movement.

The main argument for Yes is that the threshold is not especially demanding relative to historical normal conditions, which are often described as substantially above 60 per day. If the security environment improves, insurers, ship operators, and regional actors could quickly restore more routine transit patterns, and the average could cross 60 relatively quickly once confidence returns. The strait is a critical passage, so there is a built-in incentive for trade flows to resume once the perceived risk premium comes down.

The main argument against Yes is timing. There are only about five months left in the year, and current traffic is still described as effectively shut down or severely constrained, which means the market needs a major regime change rather than a gradual drift. Even if headline tensions ease, shipping companies often move cautiously, and a slow normalization may fail to push the 7-day average above 60 before December 31. On balance, I think the market is pricing in too much certainty that traffic will recover soon, while the actual data still look too weak for me to treat Yes as the more likely outcome.