Strait of Hormuz traffic returns to normal by December 31?

The core issue is that the market does not resolve on a vague sense of reopening; it requires a 7-day moving average of arrivals at or above 60, which is effectively a sustained return to near-normal flow. The latest reporting still places traffic dramatically below that level, with recent daily counts in the single digits or low teens and some days approaching zero. That means the Strait is not merely recovering slowly; it is operating at a fraction of normal capacity, so the bar for a Yes outcome is very high from today’s starting point.

The bullish case is that this is a binary geopolitical and operational regime problem, not a gradual industrial recovery. If conflict risk falls, shipping can rebound quickly because vessels, insurers, and operators can re-route back once they believe the route is safe and commercially viable. With more than four months left in the year, there is still enough time for a ceasefire, a security arrangement, or a major diplomatic shift to restore traffic sharply, and the market’s own odds imply that traders do not see the situation as permanently broken.

The bearish case is stronger in the near term because all the live indicators point to continued disruption rather than stabilization. The reported averages are still far below the threshold, recent weekends have shown extremely weak movement, and the operational environment remains shaped by attacks, warnings, and mutual political conditions that make a clean normalization unlikely. A 7-day average of 60 is not just a matter of one or two busy days; it would require a sustained and broad-based return of traffic, and that is difficult to reconcile with current conditions unless there is a major and credible shift in security and diplomacy.

Relative to the market price, I would lean below the current implied probability. The market seems to be assigning meaningful weight to a late-year rebound, but the combination of depressed baseline traffic, persistent security concerns, and the need for sustained rather than momentary improvement argues for a lower chance than 30%. The path to Yes exists, but it depends on a fairly abrupt change in the geopolitical backdrop, and absent that, the most likely outcome is that traffic remains below the required level through year-end.