Citrini Research Warns of Grim Crude Supply Crisis in Wake of AI-Driven Market Disruption

Strait of Hormuz Disruptions: New Insights Emerge from On-Ground Observations

Amid heightened tensions around the strategically critical Strait of Hormuz, global oil traders have been closely tracking satellite data and official signals for clues on disruptions. However, a recent approach taken by Citrini Research has provided new insights into the situation.

The firm deployed an analyst directly to the Musandam Peninsula in Oman, where the individual conducted on-ground observations, including traveling by boat to monitor shipping activity amid rising tensions involving Iran and the United States. These observations have challenged widespread market assumptions that the key oil passage is effectively shut.

Traffic in the Strait Remains Below Typical Volumes

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According to Citrini's findings, vessels are still transiting the strait, with traffic recently increasing to around 15 ships per day. This is still well below the typical volumes, suggesting that disruption is partial and fluid rather than a complete halt.

The analyst observed that some tankers are moving with their Automatic Identification System (AIS) turned off, making them invisible to conventional tracking tools. The firm believes actual traffic may be higher than publicly available data indicates, with activity reportedly picking up through routes such as the Qeshm channel.

Selective Permitting by Iran

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Insights gathered from conversations with local fishermen, smugglers, and regional officials indicate that Iran may be selectively permitting ships to pass. Rather than a full blockade, the firm described the situation as a "functional checkpoint," where vessels require clearance before navigating waters near Iranian territory.

Citrini emphasized that the evolving situation does not fit into a binary narrative of the strait being either fully open or completely closed. The conclusions are based on limited field observations and anecdotal evidence that are difficult to independently verify.

Looking Ahead: Disruptions to Persist

The firm expects disruptions to persist, embedding a structural risk premium in oil markets. Citrini anticipates a gradual recovery in traffic, potentially reaching up to 50% of pre-conflict levels within the next four to six weeks. The firm maintains a preference for longer-dated crude contracts, such as December 2026 WTI, over near-term positions.