Bab el-Mandeb Closure Probability: 28.5% by Year-End

The Bab el-Mandeb Strait, a narrow passage between the Arabian Peninsula and the Horn of Africa, is one of the world’s key maritime chokepoints. A prediction market asking whether it will become “effectively closed” has drawn $5.75m in volume, signalling robust interest. The market resolves to Yes if the IMF’s PortWatch tool registers a seven-day moving average of ship arrivals—transit calls—at or below 10 for any day between the market’s creation and the end of June 2026. Such a low count would indicate a near-total halt to normal traffic. Current pricing puts the probability of a closure by 31 December at 28.5%. That is the highest of any deadline in the market, implying that traders see a meaningful but not overwhelming risk over the next 18 months. The odds drop for earlier dates: 17.5% by 30 September, 12% by 31 August, and just 6% by 31 July. Contracts for deadlines before July have already settled at 0%, meaning the condition was not met in the first half of this year. This sloping curve tells a clear story: markets do not expect an imminent shutdown, but they are not ruling out a sharp deterioration later in the year or in early 2026. The jump from 6% in July to 28.5% in December suggests that some geopolitical, military, or economic trigger might be expected—though the market data itself offers no specifics on causes. What it does show is that the perceived window of risk widens considerably as time extends. The use of a seven-day moving average as the trigger means a brief interruption would not count; a sustained collapse in traffic is required. This definition guards against flagging one-off incidents and aligns with the concept of an effective, rather than a technical, closure. The market resolves as soon as the PortWatch data meets the threshold, or at the final deadline if it never does. Revisions to past data are considered only until the final date, adding a layer of procedural certainty. With over $5.7m in total volume, the market is liquid enough to be taken seriously. The dispersion of probabilities across dates implies that if a closure does occur, it is more likely to happen in the final months of the year. Traders have placed their bets, and for now, they signal that the strait remains vulnerable but far from shut.