I’ve been staring at vessel tracking data all week and honestly it’s a little surreal. The Strait of Hormuz – the strait that one fifth of the world’s oil passes through every single day – is basically a ghost town right now.
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Not because it’s closed. Because it costs $2 million to get through it.
This is the story that every tanker investor needs to understand heading into Q2, so let me break it down the way I see it from the deckplates.
Iran Built a Checkpoint. A Real One.
Since mid-March, the Islamic Revolutionary Guard Corps has been running what the shipping industry is now calling “the Iranian tollbooth” – a stretch of water between the islands of Qeshm and Larak, hugging the Iranian coastline, where ships that want out of the Persian Gulf have to prove they belong there.
Here’s how it actually works in practice. If you’re a shipowner who wants to move your vessel through, you don’t call Iran. You call a middleman – a company with IRGC ties – and you hand over everything: who owns the ship, what flag it’s flying, what’s in the hold, where it’s going, who’s on the crew, and live position data off the AIS transponder. That file goes to the IRGC Navy’s Hormozgan Provincial Command for a background check.
Are you linked to the US or Israel? You’re probably not getting through.
If you pass the check, Iran rates your country on a scale from one (friendly) to five (hostile) and that number determines your negotiating terms. The baseline price is roughly a dollar per barrel of cargo. A fully loaded VLCC carries around two million barrels. So we’re talking about a $2 million toll – paid in Chinese yuan or stablecoins, not dollars – just to exit the Gulf. At least two ships have already paid it.
Once payment clears, the IRGC hands over a permit code and routing instructions. The ship broadcasts that code over VHF radio as it approaches the strait, a patrol boat comes out to meet it, and it gets escorted through. Some ships have been told to change their flag entirely before transiting.
That’s not a metaphor. That is literally what’s happening out there right now.
Pakistan Is Playing Middleman
One of the more fascinating storylines this week: Pakistan has become the first country to successfully negotiate bloc access for a group of ships. Iran agreed to let 20 Pakistani-flagged vessels through – two per day – after Islamabad publicly expressed support for Iran during the conflict.
The wrinkle? Pakistan doesn’t have 20 ships in the Gulf. So Pakistan’s government quietly reached out to major commodity trading houses asking whether they had VLCCs that could temporarily re-flag under Pakistan and sail through under that arrangement. At least two big trading houses got that call. The tankers Multan and P-Aliki have already made it out.
Think about what that tells you. Countries with diplomatic standing in Tehran right now have something genuinely valuable – access to the only exit from the Persian Gulf. That’s a form of leverage that’s going to reshape regional relationships for a long time, regardless of how the conflict ends.
Legal? Almost Certainly Not. Practical? Apparently Yes.
Iran sent a letter to the International Maritime Organization this month saying ships from “non-hostile” nations can get safe passage if they comply with its requirements. Its legal argument is self-defense – as a coastal state, it claims the right to inspect vessels transiting nearby waters.
Maritime law professors are not buying it. The UN Convention on the Law of the Sea is fairly explicit about freedom of navigation through international straits. Iran signed the convention but never ratified it (and for what it’s worth, neither did the US), which creates a legal gray zone but doesn’t really make this okay by any mainstream interpretation.
The bigger practical problem for shipowners: paying the IRGC – which the US has designated as a foreign terrorist organization – could put you in violation of US, EU, and UK sanctions. Your insurance might not cover it. Your bank might flag it. So even if a shipowner is willing to physically risk the passage, the legal exposure afterward is genuinely scary.
What It Means for $FRO, $HAFN, $DHT, and the Rest
All-of-March tanker transits through Hormuz don’t add up to a single pre-war day. Oil is trading above $107 a barrel. A Kuwaiti tanker got hit by a drone near Dubai on March 31. US Marines just arrived on the USS Tripoli with another expeditionary force following next month.
War-risk premiums have blown out. Routes are being repriced from scratch. And here’s the dark part: security analysts say Iran actually needs to keep attacking ships occasionally for the tollbooth to stay credible. The threat only works if it’s real.
For tanker investors, this is the defining variable of Q2. Tight supply, repriced freight rates, and a chokepoint that the world can’t easily route around. [AFFILIATE LINK: Seeking Alpha] has strong analyst coverage on how Hormuz disruption is flowing through earnings models for the major names.
The SteamGauge is tracking all of it daily. Full signal at txzen.com.
The direct rate impact of the Hormuz situation for VLCC investors is tracked in VLCC Spot Rates in April 2026. For context on how transit disruptions affect the economics of different rate structures, Spot Rates vs Time Charter Rates covers the distinction that determines which ships benefit most.