Rising geopolitical tensions in the Middle East are beginning to reshape economic expectations, with prediction markets increasing the probability that the United States could face a recession before the end of 2026. The shift in sentiment comes as oil prices move above $100 per barrel for the first time in nearly four years following escalating conflict involving the United States, Israel, and Iran.
Trading activity on Polymarket currently places the likelihood of a U.S. recession by the end of 2026 at roughly 32%. The contract resolves if the Bureau of Economic Analysis records two consecutive quarters of negative real GDP growth between the second quarter of 2025 and the final quarter of 2026, or if the National Bureau of Economic Research formally determines that the economy entered a recession during that period. Comparable contracts on Kalshi show similar expectations, with traders assigning slightly above a 32% probability.
Approximately one-fifth of global oil shipments pass through the corridor, making any sustained interruption a major threat to global energy supply. Analysts warn that a prolonged closure could trigger a shock comparable to the oil crises that shaped the global economy during the 1970s.
Meanwhile, Jamie Dimon, head of JPMorgan Chase, has also acknowledged that a recession scenario for 2026 cannot be ruled out, despite relatively strong GDP growth earlier in the economic cycle.
Recent labor market data has nevertheless added to concerns about economic momentum. Figures from the Bureau of Labor Statistics show the U.S. economy lost around 92,000 jobs in February, pushing unemployment to approximately 4.4% and bringing the total number of unemployed Americans to about 7.6 million. Financial markets have reacted cautiously, with U.S. stock futures trading lower in early Monday activity.
Source: Market data from Polymarket and Kalshi
Disclaimer: This content is for informational purposes only and does not constitute financial advice or an investment recommendation. Economic forecasts and market probabilities are inherently uncertain and subject to rapid change.
