US-Iran War Reignites — and Traders See 92% Odds of $4 Gas

Prediction market traders on Kalshi now price a 92% chance that US gas prices top $4 by the end of July.

Gas prices had eased through June as a fragile ceasefire held. That calm broke last week when the US ended the truce and relaunched attacks on Iran.

US and Iran Return to War, Reviving Fuel Fears

US Central Command struck sites near Bandar Abbas and Greater Tunb Island on July 15. An evening wave of strikes targeted Iranian missile, drone, and coastal surveillance capabilities.

Iran has also answered with retaliatory attacks on what it called US assets across Bahrain, Kuwait, and Jordan. Furthermore, Tehran has declared the Strait of Hormuz shut amid the latest escalation.

Meanwhile, the US reimposed a blockade on Iranian ports near the strait, choking supply through a vitaloil route.

“US forces enforced naval blockade measures against Iran, July 15, by disabling an unladen oil tanker attempting to sail toward an Iranian port in the Arabian Gulf,” CENTOM said.

Traders Price a Renewed Gas Price Spike

Escalating tensions have already lifted crude oil prices. Brent crude climbed to an intraday high of $86 on July 14 and has gained nearly 16% since July 7. 

West Texas Intermediate (WTI) has also risen more than 15%, increasing the likelihood that higher crude costs will feed through to US gasoline prices in the coming time. That expectation is reflected in prediction markets, although traders remain divided on the extent of the increase.

Kalshi traders now assign a 92% probability that the gas price will exceed $4 per gallon by the end of July. The market, which settles using the AAA national average, also prices a 60% chance of gasoline topping $4.10 and a 36% chance of reaching $4.20.

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Polymarket traders stay more cautious. Its end-of-July contract offers only 57% odds at $4, though the lower price tiers trade thinly and send mixed signals.

The divergence comes after gasoline prices retreated from their spring highs. In May, BeInCrypto reported that the national average reached $4.52 per gallon, up 51.6% from the pre-war level of $2.98 over 72 days.

The national average currently stands at $3.89 per gallon, up from early July lows of around $3.79.

Whether gas climbs further may hinge on the war’s path. A recent poll found that 79% of Americans expect the war to continue, while six in 10 believe gasoline prices will increase over the next year.

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