Kalshi traders price high odds of U.S. gasoline topping $4 in July

Kalshi traders are assigning a high probability to U.S. gasoline prices exceeding $4 a gallon before July ends, while the national average stood at $3.89 on Wednesday, according to AAA. The repricing comes alongside firmer crude prices and renewed U.S. military action against Iran, a development closely watched by energy markets because of risks around the Strait of Hormuz.

CNBC reported that odds on Kalshi for gasoline crossing $4 by month-end climbed sharply over two days, with the market cited at about 90% after standing at 56%. Other Kalshi figures cited by CNBC showed traders placing the probability at 93% for a move above $4 and 63% for a move above $4.10.

The contract asks where the U.S. gasoline price will be this month and is settled against AAA data. In such event contracts, market prices are commonly presented as implied probabilities, reflecting the aggregate positions of traders rather than an official forecast.

AAA reported Wednesday’s national average at $3.89 a gallon, about 3 cents above Tuesday’s level. The average moved above $4 last month, according to CNBC. The highest national average so far this year was $4.56 on May 21.

Kalshi traders were assigning much lower odds to a return to that earlier peak. CNBC reported the market showed less than a 5% probability that the national average would rise above $4.50 again by the end of July.

Oil rises as geopolitical risk returns

The gasoline-price wagers are being made as oil markets respond to renewed U.S. strikes on Iran. CNBC reported that the U.S. ended its ceasefire with Iran last week and resumed strikes.

U.S. Central Command said in a post on X that it launched a second wave of strikes on Iran at 3 p.m. ET on Wednesday, after an earlier round of strikes that morning. In a separate Wednesday post, Central Command said the strikes were intended to further weaken military capabilities that Iranian forces had used against commercial shipping in the Strait of Hormuz.

The Strait of Hormuz is a key passageway for global oil shipments, so military activity in the area can affect crude pricing and, in turn, refined-product markets such as gasoline. The extent and timing of any pass-through from crude oil to retail pump prices can vary by region, refining margins, distribution costs and taxes.

Crude prices have advanced for three consecutive sessions, according to CNBC. U.S. West Texas Intermediate crude for August delivery settled Wednesday at $79.60 a barrel, up 26 cents, or 0.3%, from the prior session. Brent crude for September delivery, the international benchmark, finished at $84.95 a barrel, also 0.3% higher on the day.

CNBC disclosed that it has a commercial relationship with Kalshi, including customer acquisition arrangements and a minority investment.

This story draws on original reporting from CNBC.