how to open the strait of hormuz

market vibes

Thursday, March 12, 2026

The key to ending this war for both sides is cash flow from the proceeds of oil. If the Strait of Hormuz stays shut Iran has a form of plenary power. If the Strait is open, Iran must negotiate. Although this is imperfect I think it will work:

A public announcement (via the White House or US Treasury):

The United States will not tolerate Iran’s illegal blockade of the Strait of Hormuz, which is starving global markets of energy and punishing innocent nations. Therefore,we announce the following interim measure to restore a partial or completely free flow of oil shipments to protect our allies and global economies:

• Any crude oil or petroleum products that successfully transit the Strait of Hormuz…whether Iran selectively allows it or not…will be subject to US-monitored redirection when vessels exit the eastern end of the strait into the Gulf of Oman and cargoes move into the high seas.

• The US (via Treasury/OFAC or a new wartime task force) will immediately compensate the cargo owners and/or exporters at prevailing spot-market prices upon boarding/verification in safe waters. The core intent of the Compensated Redirection Mechanism (CRM) is to allow bona fide non-combatant transactions—on legitimate GCC-origin crude on neutral-flagged tankers heading to scheduled destinations…to proceed freely after quick verification, without disruption beyond the boarding check.

• Compensation to be paid in US dollars.

• Redirected oil will be resold, auctioned, or transferred at cost or below to high-need partners hardest hit by the crisis. The US does not keep it under any circumstances.

• This is an emergency humanitarian and economic stabilization initiative, not seizure. Owners get paid promptly, with no loss on paper, and the world gets a stabilized supply. However, if Iran insists on blockading, the Strait will remain closed to ALL shipping indefinitely until Iran accepts the only condition precluding peace: forgoing possession of and capability to produce nuclear weapons.

The case for action:

Iranian crude exports continue to pass through the Strait at a notable pace of 1 to 1.5 million bpd via a handful of sanctioned VLCCs (Reuters). Total Iranian exports since February 27 are reported at 11.7–16.5 million barrels, mostly heading to China via the strait (CNBC).

Iranian-origin crude oil remains fully sanctioned under longstanding U.S. authorities, including Executive Order 13902. Any Iranian petroleum exports transported via the shadow fleet are illicit and subject to blocking and forfeiture consistent with recent OFAC actions and civil forfeiture proceedings. Therefore, while legitimate GCC-origin cargoes will receive full market compensation, Iranian-origin oil will be seized outright.

If Iran decides to respond to this initiative by hermetically sealing the Strait, including a blockade on Iranian ships, it would be economic suicide for Tehran and the single fastest way to break the current stalemate. Iran is still quietly slipping 1 or 2 VLCCs through the strait every day. Those exports have delivered an estimated 16+ million barrels since the war started. It’s the only real cash flow they have left.

A total self-blockade would mean no hard money for imports, public subsidies, and military salaries. Inflation, already 50%, would spontaneously hyperinflate. The regime knows from 2019 and 2022 what zero cash flow does to street protests.

The solution is to say,“Iran can control whoever passes through the strait, but the US Navy will redirect those ships.”

Alternatively, if necessary, the US can opt to seal the strait unilaterally and cut off all cash flow to Tehran. The GCC nations have deeper reserves to weather several weeks of pain than Tehran, especially if the US, GCC, and their allies bring all conceivable pressure to bear on Iran to return to the table.

This is an asymmetric idea… that flips Iran’s physical chokehold into legal wartime interdiction without sending US warships into a kill zone that is prolonging a lethal stalemate.

JJ

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