Current Market Outlook

Prediction markets currently assign a 27% probability that Iran will close the Strait of Hormuz before the end of 2026. This price, trading at 27¢ on Polymarket, indicates the market views a full or severe closure as unlikely but a significant non-zero risk. With $109,000 in trading volume, the market has moderate liquidity, reflecting serious interest from informed traders. A 27% chance suggests that while the consensus leans heavily toward the strait remaining open, the market is pricing in a meaningful possibility of a major geopolitical escalation.

Key Factors Driving the Odds

The primary factor suppressing the "Yes" probability is the immense strategic and economic cost to Iran itself. The Strait of Hormuz is a critical chokepoint for global oil shipments, with about 20% of the world's oil passing through it. A closure would trigger a global economic crisis and almost certainly provoke a direct military response from the United States and regional allies. Historically, Iran has used threats of closure as a coercive diplomatic tool rather than a prelude to action. Recent tensions, including attacks on shipping and the ongoing shadow war with Israel, demonstrate Iran's preference for asymmetric, deniable operations that fall short of outright closure.

Secondly, Iran's economy remains heavily reliant on its own oil exports, much of which also transit the strait. A closure would catastrophically damage its primary revenue source. The market is effectively betting that the Iranian regime, however confrontational, is ultimately rational in avoiding an act that would be both economically self-destructive and militarily suicidal.

What Could Change These Odds

The odds could spike rapidly in response to a direct, large-scale military confrontation between Iran and either the United States or Israel. An event such as a successful Israeli or U.S. strike on critical Iranian nuclear infrastructure or leadership could force Tehran to retaliate in the most dramatic way available. Similarly, a major escalation in the Gulf, like the seizure or sinking of a U.S. naval vessel by Iranian forces, could create a cycle of retaliation leading to closure. Monitoring the status of nuclear negotiations and the health of Supreme Leader Ali Khamenei is also critical, as a leadership transition or a collapse of diplomacy could increase regional instability. The market will be most sensitive to tangible military actions, not rhetorical threats.