Citrini Research Sends Analyst to Strait of Hormuz to Assess Shipping Activity Amid Geopolitical Tensions

Citrini Research, known for its bearish stance on artificial intelligence earlier this year, has taken a hands-on approach to assess the situation in the Strait of Hormuz, a critical oil transit point. The firm sent an analyst to Oman's Musandam Peninsula, where the individual traveled by boat to observe shipping activity in the region. The analyst's findings challenge the prevailing market narrative that the strait is effectively closed. Instead, the report indicates that vessels are still passing through, with traffic increasing to approximately 15 ships per day, according to the firm's Substack post. This level, while significantly lower than usual, suggests a partial disruption rather than a complete shutdown. The report highlights that many ships are turning off their Automatic Identification System (AIS) transponders, making it difficult to accurately gauge the true volume of traffic. The analyst, who remains anonymous, noted that the flow of tankers through the Qeshm channel has been accelerating in recent days. Citrini's report also suggests that Iran is selectively allowing ships to pass, requiring approval for transiting near Iranian waters. This creates a 'functional checkpoint' rather than a full blockade, according to the firm. The findings are based on anecdotal accounts and interviews with local fishermen, smugglers, and officials, which are challenging to independently verify. Despite this, the firm anticipates a prolonged disruption that could embed a lasting risk premium into oil markets. Citrini recommends a preference for longer-dated crude exposure, favoring December 2026 WTI contracts over the front month. The firm expects that within the next 4-6 weeks, up to 50% of pre-conflict traffic levels could be restored, though the new normal may involve a permanent risk premium in oil prices.