Hormuz Strait Disruption: Market Expectations, Geopolitical Triggers, and the Oil Price Paradox
Date: June 10, 2026
Bleak Outlook for Hormuz Strait Shipping Normalization
Market traders are increasingly pessimistic about the Strait of Hormuz returning to normal shipping operations before 2026. Current data from Kalshi indicates only a 34% probability of the strait resuming normal passage by January, suggesting a 66% chance of continued disruptions. This marks a significant decline from just two weeks prior, when the probability of normalization by August was assessed at 66%.
Geopolitical Escalation as a Primary Catalyst
The sharp decrease in the likelihood of normal shipping is primarily attributed to renewed hostilities between Iran and Israel. Recently, Iran accused Israel of breaching a ceasefire and launched missile strikes in response to Israeli attacks on Lebanon. In retaliation, Israel conducted extensive strikes on Iranian defense systems.
U.S. President Donald Trump has indicated that a blockade of the strait could last until early September, coinciding with Labor Day. Despite Iran's announcement of a halt to strikes against Israel, market reactions have remained relatively stable, with Trump asserting that the blockade would continue until a final agreement is reached.
The Oil Paradox: Major Disruption, Calm Prices
Despite the severe supply shock in the Strait of Hormuz, oil prices have remained surprisingly stable. The conflict has paralyzed transit through the strait for over three months, with current transit volumes at only 15% of pre-war levels. Before the conflict, approximately 15.6 million barrels of crude oil were shipped daily through the strait, accounting for over a quarter of global seaborne crude oil trade. However, Brent and WTI crude prices have only dipped to around $91 and $90 per barrel, respectively.
Core Reasons for Oil Price Stability
Experts attribute the stability in oil prices to a significant volume of crude oil bypassing the blockade through clandestine channels. Tankers are reportedly turning off their transponders to avoid detection, leading to what are termed 'ghost voyages.' JPMorgan estimates that clandestine shipments reached approximately 2.1 million barrels per day in late May.
Additionally, Piper Sandler's data indicates that about 4.5 million barrels per day of crude oil are being exported from the Persian Gulf via alternative routes, particularly through the Saudi East-West pipeline.
Industry experts suggest that while strait traffic may be at 0%-10% of pre-war levels, clandestine shipping has alleviated some of the crisis. Furthermore, a reduction in crude oil imports by major global consumers and a shift towards utilizing existing inventories have also contributed to the stability of oil prices.
Warnings Against Complacency
Despite the current stability, industry veterans caution against complacency, warning that the market may be underestimating the disruption's long-term effects. Since the conflict began, commercial crude oil inventories have significantly declined, with the U.S. Strategic Petroleum Reserve nearing its lowest levels since the early 1980s.
Forecasts suggest that Brent crude could average $130 per barrel in the coming months, potentially pushing U.S. gasoline prices above $5 per gallon. Analysts emphasize that rising prices are necessary to encourage energy conservation and facilitate emergency reserve releases.