Strait of Hormuz traffic returns to normal by December 31?
I assign a below-even chance that Strait of Hormuz traffic reaches the 60-vessel 7-day average threshold by year-end. The main reason is that current traffic is still far below normal, and a full recovery has to happen quickly and persistently for the market to resolve Yes.
Analysis
The market is asking for something fairly demanding: not just a bounce in traffic, but a 7-day moving average of at least 60 transit calls, which is close to a full normalization of Hormuz shipping. Recent reporting still shows traffic in the low single digits to low teens per day, with weekly counts that remain well beneath the pre-crisis baseline, so the starting point is extremely depressed. That means the market needs a large, sustained improvement rather than a modest rebound, and the clock is already running with only a few months left in 2026.
The strongest argument for a Yes outcome is that shipping conditions can improve quickly if the underlying security and diplomatic environment changes. If US-Iran or Oman-mediated talks produce even a partial stabilization, insurers and operators could re-enter the route faster than many expect, and a return of vessels would likely be self-reinforcing once freight and insurance costs fall. Because this market uses a 7-day moving average, it does not require perfect stability for months, only a brief period where daily traffic is high enough to lift the weekly average to 60 or more.
The strongest argument against Yes is that the gap from current activity to the resolution threshold is still very wide. Reports continue to describe attacks, threat perceptions, AIS behavior, and navigation risk as major constraints, and those frictions do not usually disappear overnight. Even if diplomacy makes progress, traffic may recover only gradually, and a partial reopening or tentative increase in flows may still leave the 7-day average short of 60 by December 31. On balance, the market’s near-even price seems a bit optimistic relative to the current operational reality, so I lean No but acknowledge a meaningful tail risk of a rapid normalization.
Arguments
For
- Arguments for Yes: Shipping traffic can rebound quickly once operators and insurers believe the route is safe enough to resume normal routing.
- Arguments for Yes: A successful diplomatic arrangement or phased reopening could create a sudden jump in daily transits that is sufficient for the 7-day average rule.
Against
- Arguments against Yes: Current traffic is still only a small fraction of the normal level, so the market needs an unusually large recovery in a short time.
- Arguments against Yes: Persistent security uncertainty and operational caution may keep carriers from returning fast enough to reach a sustained average of 60.
Key drivers
- Current Hormuz transit levels are far below the 60-call threshold, so the market needs a sharp and sustained recovery.
- Any credible security de-escalation or diplomatic breakthrough could unlock a fast return of shipping and insurance capacity.
- The 7-day moving average rule means a short burst of high traffic can qualify if it happens soon enough and lasts long enough.
Risk factors
- A renewed attack, threat escalation, or navigation disruption could keep traffic suppressed through year-end.
- Diplomatic talks may improve expectations without producing enough real vessel flow to lift the weekly average above 60.
Scenarios
Best case
A diplomatic or security breakthrough occurs before late autumn, insurers and shipping lines rapidly restore confidence, and daily transit calls climb enough for the 7-day average to clear 60 before year-end.
Most likely
Traffic improves somewhat from the current depressed level, but the recovery is incomplete and uneven, leaving the 7-day average below 60 when the market closes.
Worst case
Security tensions persist or worsen, traffic remains constrained at low levels, and the weekly average never comes close to the 60-call threshold by December 31.
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