Citrini Research has taken an unconventional approach to analyzing the situation in the Strait of Hormuz, dispatching an analyst to the conflict zone to assess shipping activity firsthand. Contrary to prevailing market fears of a complete blockade, the analyst reported that approximately 15 vessels are currently transiting the strait daily, a figure that, while below normal, indicates a partial disruption rather than a total shutdown. This nuanced perspective challenges the binary narrative of “open” or “closed” and suggests that Iran is selectively allowing ships to pass through, creating a functional checkpoint.
The implications for oil markets are significant. Citrini anticipates that the current situation will embed a lasting risk premium in oil prices, leading to a preference for longer-dated contracts. They favor December 2026 WTI contracts over front-month options, suggesting that traders should prepare for a new normal where disruptions persist, but shipping volumes may recover to 50% of pre-conflict levels within the next month and a half.
Market professionals should consider this evolving dynamic when assessing oil exposure and potential price movements in the coming weeks.
Source: cnbc.com