Strait of Hormuz traffic returns to normal by end of May?

Platform comparison

Market context

The Strait of Hormuz handles roughly one-third of global seaborne oil trade. A 7-day moving average of 60 daily transit calls would represent a return to pre-disruption baseline traffic levels. The market currently prices this outcome at 1% by end of May 2026, implying near-certainty that congestion, geopolitical friction, or rerouting will persist through the settlement window.

Historical precedent suggests the strait recovers slowly from sustained shocks. During the 2019 tanker attacks and subsequent tensions, traffic dipped but stabilised within weeks rather than months. The 2022 Russia-Ukraine war caused longer-term rerouting patterns that took quarters to normalise. Current constraints stem from Houthi attacks on shipping since October 2023, which prompted many operators to divert via the Cape of Good Hope—a 6,000-nautical-mile detour. Even after military intervention reduced attack frequency in early 2024, vessel operators remained cautious about returning. The psychological lag in routing decisions typically outlasts the actual threat reduction.

Catalysts to monitor include announcements from the US Central Command regarding sustained naval presence in the region, Houthi ceasefire negotiations tied to Gaza developments, and insurance premium adjustments that signal operator confidence. Lloyd's List and Reuters shipping reports track weekly transit patterns closely. Any sustained period of zero reported attacks, combined with explicit statements from major shipping lines committing to Hormuz routing, would be the strongest signal. However, the 1% probability reflects the consensus view that even optimistic scenarios leave some traffic permanently rerouted and that full normalisation requires both security restoration and psychological reset—a combination unlikely within 18 months.

Methodology

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Resolution & payout

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