Allen Smith
669 posts
@alphaseeking
Wanna be investor.
@HFI_Research @citrini 13) Do not assume that just because you read something in Lloyd’s or BBG or the FT that it’s true. Never forget the lesson of the Gell-Mann Amnesia effect. Iran wants to will a toll into being. It would be a disaster. Don’t help them by spreading propaganda. 🫡
JUST IN: The IRGC Navy just added a second lock to the gate. Hours after the ceasefire was supposed to reopen Hormuz, the IRGC issued an official directive requiring all commercial vessels to use two alternative corridors near Larak Island to avoid sea mines deployed during the war. Inbound traffic north of Larak. Outbound traffic south of Larak. All ships must coordinate with the IRGC Navy before entering. Until further notice. The mines are real. Iran laid them during the February to April campaign as a defensive measure against the US Fifth Fleet. They are in the standard shipping lanes. The alternative routes bypass the minefields but funnel every vessel through a narrow channel inside Iranian territorial waters, past the same Larak Island where the IRGC toll booth already operates and the patrol boats already escort ships one at a time after verifying clearance codes paid for in yuan or cryptocurrency. This is not a safety measure. It is infrastructure. The mines create the problem. The alternative routes create the solution. The solution requires coordination with the IRGC. The coordination requires toll payment. The toll requires yuan. Each layer reinforces the previous one until the Strait of Hormuz is no longer a waterway governed by international maritime law but a managed corridor operated by a theocratic military force collecting revenue in a currency that is not the dollar. The sequence now runs as follows. A vessel operator contacts IRGC-linked intermediaries. Submits IMO number, ownership chain, cargo manifest, crew list, and destination. The IRGC’s Hormozgan Provincial Command screens for sanctions alignment and assigns a friendliness tier. The toll is calculated at approximately one dollar per barrel for oil tankers, paid in yuan through CIPS or in stablecoins through the Qeshm Island crypto exchange window. If approved, the vessel receives a clearance code and route instructions for the Larak corridors. Upon approach, VHF radio hail, AIS verification, and a patrol boat escort through the minefield-free alternative channel. One ship at a time. Fifteen to twenty ships completed this process in the first 24 hours. The pre-war average was 138 per day. Four hundred vessels are reportedly waiting outside the strait. The Gulf states have declared the toll illegal and refuse to pay. Japan’s prime minister called the strait an international public good. Oman’s transport minister said international agreements prohibit fees. None of this has stopped the IRGC from operating the corridor, collecting the revenue, and turning back tankers that attempt passage without a code. Trump claimed a complete opening of the strait. The strait is not completely open. It is completely controlled. The difference between closed and controlled is that a closed strait generates no revenue and invites military intervention. A controlled strait generates reconstruction funding in yuan, establishes a precedent for non-dollar energy settlement, and operates under the legal fiction of a safety directive that blames wartime mines for the necessity of IRGC coordination. The mines will take months to clear. The alternative routes will become permanent. The toll will become normalised. And by the time Islamabad concludes, the infrastructure of a post-dollar energy chokepoint will have been stress-tested, revenue-generating, and operationally embedded for two weeks under the protection of a ceasefire that was supposed to dismantle it. Full analysis open.substack.com/pub/shanakaans…
Close to 10% of the tanker fleet is stuck inside Hormuz and not able to trade. Some lucky owners are even making massive rates on floating storage. Full impact of the lost volumes on tankers wont be felt until the 90 day mark. The ~6mmb/d lost is about 20% of seaborne volumes, so the big question is how much of the ~10% excess fleet supply will be absorbed by inefficiencies? So far all of it and then some when looking at Suez/Afra rates. And even VLCC rates from the USG still looking strong. That said, there are extra inefficiencies right now and demand destruction hasn't started to bite. In a prolonged shutdown I think it is reasonable to expect both demand destruction from even higher oil prices and some normalization of trades to weigh on rates but is definitely not a foregone conclusion considering much longer hauls. After the straight reopens, trade catch up will result in exceptionally high tanker rates.
@0xLuxi You won’t even be able to put two kids through college in 20 years with that
