You do not have to bet on gas prices to find this useful. Prediction markets like Kalshi let people buy and sell contracts tied to real-world events. If you think something will happen, you buy a contract that pays out if it does. The price of that contract reflects the crowd's estimate of the odds.
Kalshi traders currently assign a 93% probability that the national average gas price will hit $4 per gallon before July ends. The contracts are verified by AAA, the same group that tracks gas prices at the pump every day.
Traders are also betting on a higher ceiling. The odds that gas climbs above $4.10 are at 63%. The odds that it will go over $4.50 again are less than 5%.
The reason for the sudden move is not hard to find. Last week, Washington terminated the ceasefire with Tehran and began new military operations. In an X post, U.S. Central Command announced a new round of strikes against Iran at 3 p.m. ET on Wednesday, which came after an initial wave of attacks earlier that morning. The strikes, according to another X post from Central Command, are designed to "further degrade military capabilities Iranian forces have used to attack commercial shipping in the Strait of Hormuz."
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For three consecutive days, oil prices have climbed. West Texas Intermediate crude futures for August delivery closed at $79.60 per barrel on Wednesday, a gain of 26 cents (0.3%) from the prior session. The international benchmark Brent crude's September futures contract ended at $84.95 per barrel, likewise rising 0.3% for the day.
This year's peak national average gasoline price occurred on May 21, reaching $4.56.
The current average of $3.89 is already uncomfortable for a lot of households.
The bottom line: Traders are not expecting a full-blown crisis. The odds of $4.50 gas are below 5%, meaning the crowd thinks the situation stays contained.
The Strait of Hormuz is a vital artery for global oil shipments, and any military escalation near this chokepoint can send crude prices higher. The U.S. strikes are intended to protect commercial shipping, but traders are already factoring in the possibility of supply disruptions. Even if the situation remains contained, as the low odds of $4.50 gas suggest, even a modest increase in oil prices can ripple through to the pump.
Any military action near this chokepoint can quickly affect global supply chains. While traders currently see only a small chance of prices exceeding $4.50 again, the situation remains volatile.
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