Prediction market traders on Kalshi now price a 92% chance that the average US gas price will exceed $4 per gallon by the end of July. The bet comes after the US ended a fragile ceasefire and relaunched military operations against Iran last week, triggering a sharp escalation across the Gulf region.
Escalation in the Gulf
US Central Command struck sites near Bandar Abbas and Greater Tunb Island on July 15. Iran retaliated with attacks on US assets in Bahrain, Kuwait, and Jordan. Tehran then declared the Strait of Hormuz shut, a move that chokes the world's most important oil transit chokepoint. The US reimposed a naval blockade on Iranian ports near the strait, further squeezing supply through the vital route. On July 15, US forces disabled an unladen oil tanker trying to sail toward an Iranian port in the Arabian Gulf as part of the blockade.
Oil markets react
Brent crude hit an intraday high of $86 on July 14 and has gained nearly 16% since July 7. West Texas Intermediate is up more than 15% over the same period. The tanker incident and the Strait closure have added a risk premium that analysts say could push prices higher if the blockade holds.
Gas prices at the pump
The national average gas price currently sits at $3.89 per gallon, up from early July lows around $3.79. In May, the average hit $4.52, a 51.6% jump from the pre-war level of $2.98 over 72 days. A new poll finds that 79% of Americans expect the war to continue, and six in 10 believe gasoline prices will increase over the next year.
Divergence in prediction markets
Kalshi's 92% odds for $4 gas stand in contrast to Polymarket, where traders offer only a 57% chance of the same threshold by end of July. The gap may reflect different user bases or liquidity, but both platforms show a clear upward bias. Kalshi traders also price a 60% chance of gas topping $4.10 and a 36% chance of reaching $4.20 by month's end.
Whether the 92% probability materializes depends on how long the Strait of Hormuz stays closed and whether the US blockade holds. The poll suggests most Americans aren't betting on a quick resolution.
