The odds of the Strait of Hormuz re-opening by July 1st is at all time lows; and yet the front month (July) Brent is at only $111.
Figure 1: Brent spot price, in logs 3/18/2026=0 (blue), cash price (light blue), and odds of Strait of Hormuz remains closed as of 7/1/2026 (red). Source: EIA via FRED, NYMEX via barchart.com, Kalshi.
Given the correlation up to 4/27, one would’ve expected a higher Brent price (spot is graphed above, but using front month futures would yield a similar picture). One possibility is that oil prices are responding to other information regarding the likelihood of oil flow resumption, such as kinetic actions. I add in a proxy for the intensity of military action, namely the Caldara et al. Geopolitical Risk – Action index (GPR_Action).
priceoil = 4.76 + 0.217CLOSED + 0.0003GPR_Action
Adj-R2 = 0.15, SER = 0.153, DW = 0.89, NObs = 36, sample 3/18-5/11. bold denotes significant at 5% using HAC robust standard errors.
The equation still underpredicts oil prices by about $10 on 5/11.
One interesting point is that Kalshi odds for re-opening barely budged when Trump stated today (BBC):
“They better get moving, FAST, or there won’t be anything left of them. TIME IS OF THE ESSENCE!”
Nonetheless, in overnight trading, July Brent did rise about $2.40, before dropping to a $1.90 increase by midnight ET.
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