When will traffic at the Strait of Hormuz return to normal?

The core issue is that this market is not asking whether some ships keep moving through the Strait of Hormuz; it is asking whether PortWatch’s measured 7-day average rises above 60, which implies a fairly robust and sustained normalization. The recent evidence cuts against that. Reported commercial shipping attacks continued into October, recent visible tanker traffic fell to very low levels, and even the better-looking flow data mostly reflect rerouting, larger vessels, and selective participation rather than a broad return to normal operating conditions. A temporary jump is plausible, but the threshold requires multiple consecutive days of materially higher measured calls, not just a one-off improvement or a rebound in cargo volumes.

There are some arguments for a Yes outcome. Traffic has not collapsed to zero, some weekly counts have stabilized rather than deteriorated further, and if security conditions improved quickly the Strait could snap back faster than many expect because it remains economically indispensable. There is also precedent for shipping activity recovering before the broader political situation looks fully resolved, especially if insurers, operators, and naval escorts become more comfortable. If attacks stop abruptly and vessel operators regain confidence, the measured 7-day average could rise sharply within days.

Even so, I think the market’s implied No probability is somewhat too high, though not wildly so. A 6.3% Yes price implies a near-remote chance of normalization, but the evidence supports a slightly better-than-coin-flip chance of some meaningful improvement and a still-low chance of crossing the specific PortWatch threshold. My estimate is higher than the market because the Strait can re-open in operational terms faster than geopolitical narratives suggest, but the probability remains firmly in the low teens because the current data show a still-fragile, participation-constrained environment rather than a true recovery.

The main reason this is not closer to 20% or more is timing: there is not much runway left, and the data currently point to volatile, abnormal traffic rather than an accelerating trend toward 60-plus calls. For the market to be wrong, it would need to be underestimating how quickly shipping behavior can normalize once the attack risk perception shifts. For now, though, the base case is continued partial recovery without a clean return to the required average before year-end.