No. of Recommendations: 12
I've been reading the
Polymath Investor substack for about 6 months and have been impressed by his (her? their?) analysis, research depth, and thoroughness. Most of the substack's posts are about investing concepts or investment ideas, but this particular post attempts to provide a superforecasting framework with which to change one's forecast for how long it may take before the Strait of Hormuz opens to somewhat normal oil and natural gas shipment volumes. The post makes a couple of points, among many, that jumped out at me: "Reopening the strait commercially takes far longer than shutting it down," and "Track insurance pricing as your single best real-time indicator of commercial closure status. A 50% decline in war risk premiums from peak is a more reliable reopening signal than any political announcement."
https://substack.com/home/post/p-190795380Not behind the paywall are 18 "forecasting inputs needed to understand the range of probabilities for a long-duration Hormuz blockade." I'm far from knowledgeable about these issues, but the ideas presented seem both well-reasoned and reasonable. The inputs are as follows, broken into four buckets:
1. Political and Strategic Intenta. Input 1: Iran’s closure is a more of a leverage play, not a suicide mission.
b. Input 2: The death of Khamenei creates a succession fog that makes Iranian decision-making less predictable for 2 to 8 weeks.
c. Input 3: China is the single most important external pressure point on Iran’s closure calculus.
d. Input 4: U.S. domestic inflation sensitivity creates a hard ceiling on how long Washington will tolerate closure.
e. Input 5: Iran’s willingness to attack non-combatant vessels is the clearest signal of escalation commitment. Attacks on neutral-flag, non-Western vessels would mark a phase change.
2. Military Feasibility and Operational Realitya. Input 6: A chokepoint reopens twice: first militarily, then commercially. The commercial reopening always takes longer.
b. Input 7: Mine risk persists long after the political conditions for laying new mines disappear. A few dozen mines create weeks of clearance operations.
c. Input 8: Iran does not need a navy to close Hormuz. Cheap drones, shore-based missiles, and ambiguity are sufficient.
d. Input 9: Escort operations are necessary but not sufficient for commercial reopening. Escorts without mine clearance are extremely risky.
e. Input 10: GPS and electronic warfare disruption is an invisible multiplier on closure duration. It degrades navigation safety even when no kinetic attacks occur.
f. Input 11: The IRGC Navy and the regular Islamic Republic of Iran Navy are distinct forces with different command structures, capabilities, and escalation thresholds.
3. Shipping and Insurance Market Behaviora. Input 12: Insurers are the ones that determine real closure before governments do, and they determine real reopening after governments announce it.
b. Input 13: Crew refusal could be the last bottleneck and the hardest to overcome. Even with insurance and escorts, a ship master can decline to transit.
c. Input 14: The DFC $20 billion reinsurance program is necessary but addresses only one of four bottleneck layers.
d. Input 15: LNG vessels are more risk-averse than crude tankers, and LNG disruption has faster downstream consequences.
4. Diplomatic Indicatorsa. Input 16: In an active conflict, costly signals matter exponentially more than cheap talk. Watch for actions that cost Iran something.
b. Input 17: Third-party mediation by Oman, Qatar, or China is the most reliable diplomatic signal that off-ramp negotiations are real.
c. Input 18: The gap between Iranian Foreign Ministry statements and IRGC operational messaging reveals internal power dynamics.
