Traders on Polymarket now assign a 22% probability that the Bab el-Mandeb Strait, a chokepoint carrying roughly 12% of global trade, will be effectively closed by December 31, 2026. The odds have climbed as Houthi forces seized new territory along the Yemeni coast, pushing war-risk insurance costs higher and threatening oil and LNG shipping routes.
Traders on the prediction market Polymarket assign a 22% probability that the Bab el-Mandeb Strait will grind to a functional halt before the end of 2026. The strait connects the Red Sea to the Gulf of Aden and normally carries roughly 12% of global trade, including oil tankers and container ships.
Real money is behind the bet. Total market volume across related Polymarket contracts has landed between $5 million and $14 million. The probability itself has fluctuated between 21% and 33% in recent weeks.
What counts as a closure
Polymarket's contract resolves as "effectively closed" if the International Monetary Fund's PortWatch tool shows a 7-day moving average of ship arrivals falling to 10 or fewer. Traffic has already thinned sharply: daily crossings have halved on some days to roughly 15 vessels, which is 40-60% below pre-crisis levels but still above the 10-vessel threshold that would trigger a formal closure.
Houthi advances push the odds higher
The probability has climbed as Houthi forces captured the port of Mokha in September 2026, a Yemeni coastal city that gives them direct line of sight over strait traffic. They also took control of Perim Island and the Hanish islands, both of which sit in the middle of the shipping lane. The Houthis maintain their official position is that navigation stays open to all vessels except those linked to nations they consider hostile, but that distinction has done little to reassure shippers or insurers.
War-risk insurance premiums for transiting the strait have spiked to between 0.7% and 2% of hull value, a cost that can exceed a million dollars per voyage for a large container ship. Qatar has publicly warned that an effective closure would be a catastrophe for global energy markets, since the strait is a critical artery for liquefied natural gas shipments heading from the Persian Gulf to European and Asian buyers.
A real-time gauge for shipping risk
Polymarket's contract repriced within hours when Houthi forces seized Perim Island, while traditional risk assessments from shipping consultancies can take days or weeks to update. Rerouting around Africa adds roughly 10-14 days to voyages between Asia and Europe.
The contract's resolution date of December 31, 2026 gives traders about three months of remaining exposure, and the price has already moved within hours of each new Houthi advance.
Source: Crypto Briefing
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