SIG-139
geopolitics
SHADOW
🕶 SHADOW
Strait of Hormuz traffic returns to normal by December 31?
Direction NO underpriced · Confidence HIGH · Closes 2026-12-31
Market price
76%
at signal
Our estimate
63%
calibrated
Gap
+13.3pp
market vs ours
Status
SHADOW
2026-12-31 close
Market price history
Evidence
- Strait is effectively closed as of June 11, 2026: IMF PortWatch recorded just 2 transits on June 7 vs a 94/day pre-crisis baseline (~98% below normal), and the IRGC declared the strait closed 'until further notice' on June 11 (CNN, straits.live, NBC trackers).
- Conflict is escalating, not de-escalating: on June 10-11 the IRGC struck the US Fifth Fleet in Bahrain and 18 US military targets across Kuwait/Bahrain in retaliation for US strikes on IRGC coastal posts and Bandar Abbas Airport — the trajectory is moving away from reopening.
- The late-May draft US-Iran deal (60-day ceasefire, strait reopening, mine clearance for sanctions relief per Axios) stalled: Trump never signed it and Iran's Fars dismissed it as 'incomplete and inconsistent with reality,' with state-linked analysts conditioning full reopening on US withdrawal from the region.
- Even with a fast deal, normalization is slow: Iran reportedly lost track of mines it laid (per WSJ reporting on US Navy clearance ops), Iran threatens 'decisive and immediate response' to the planned UK/France mine-clearance mission, and UAE's ADNOC estimates full Hormuz flows won't resume until 2027.
- Commercial confidence is gone: all major carriers (Maersk, MSC, CMA CGM, Hapag-Lloyd) have suspended transits, P&I insurance is cancelled, 39 vessels struck and 11 mariners killed (IMO), and shipping executives say they won't return until a definitive peace agreement — the sister Polymarket market prices only ~6.5% for normalization by end of June.
Counter-evidence
- Both sides have strong incentives to close a deal (Trump's pre-midterm positioning, Iran's sanctions/blockade-driven economic distress) and 202 days leaves room for a July-September agreement followed by a multi-month traffic ramp, which is presumably the scenario the 76% market is pricing.