Why the Red Sea cannot close even if the Houthis want it to

On Wednesday, the Houthis said they would begin attacking Saudi tankers at the northern end of the Red Sea, and claimed a missile strike on one off the port of Yanbu. Polymarket's Bab el-Mandeb strait effectively closed market moved on the news. The September 30 contract now costs 11.5 cents, so the no side costs 88.5 cents and pays 13% in 55 days.

Now, closed does not actually mean closed in the rules. The market resolves yes only if IMF PortWatch publishes a seven-day average of ship arrivals at the strait of 10 or fewer. The last figure it published, covering August 2, was 29.71. That week's traffic came to 208 ships. But a yes needs 70.

• PortWatch has published 2765 seven-day averages since January 2019, and not one has been at or below 25
• The lowest ever recorded is 25.14 on July 29, 2024, near the worst of the Houthi shipping campaign
• 2026's lowest is 27.71 on July 27, one week after the Houthis declared a naval blockade of Saudi Arabia
• Not one of the 2771 days on record has seen 10 or fewer arrivals, and only one has been below 15
• Traffic through the strait rose from 25 vessels to 34 on the day of Wednesday's announcement

The best argument for yes is that shipping can empty quickly. In December 2023, the seven-day average fell 46.7% in 29 days as shipping lines rerouted around Africa. If that pattern had happened today, the number would have reached 15.8.

Even the worst 56-day fall on record, 59.4%, gets to 12.1, while the worst 148-day fall, 62.9%, gets to 11. So, according to historical data, the largest collapse in 7 years of data clears none of the existing contracts.