Schrödinger's Strait of Hormuz: Open or Closed?

Breaking news: a tanker was hit by an unidentified projectile in the Strait of Hormuz, following renewed US strikes and an Iranian drone attack on a vessel on Thursday.

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The International Maritime Organization has formally paused evacuations through the strait while assessing security. The situation is unclear—like Schrodinger's Strait—never certain if open or closed until attempting transit.

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Even after Thursday's strike, vessels continued transiting both Iranian and Omani sides. Safety is a big question, but some ship owners are still willing to go through.

Traffic is far below February levels (140+ ships/day) now at 30-40/day. The situation improved after the US-Iran interim deal, but after this weekend's strike, many will reassess.

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Most traffic is leaving the strait—ships stuck for nearly four months want to get crews and cargo out. Some empty ships return, but not enough to sustain normal exports.

The Secretary General of the IMO stated there is no legal basis under international law to impose tolls or fees on straits for international navigation, but voluntary mechanisms could be explored.

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Oman may be considering long-term tolls or fees, similar to Turkey's model in the Bosphorus—not a toll in name, but ships pay fees to navigate.

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The Trump administration opposes tolls/fees, but there may be wiggle room for a 'safety insurance waiver'. The bigger issue is banking: sanctions mean banks and risk departments won't allow payments to sanctioned entities, which would reduce traffic further.

If tolls move forward, it would limit which companies can send ships through—a commercial as well as geopolitical issue.

Insurance costs for shipping are likely to rise after this attack, making it harder to convince crews and captains to take the risk.

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It's too early to quantify the insurance increase, but it mirrors early March after the war began—insurers may pause or raise rates. Two LNG tankers turned around recently, partly due to insurance/crew cost concerns.

Insurance rates had fallen from March peaks (when Qatar's LNG facility and Saudi infrastructure were hit), which enabled some movement. But recent attacks could cause a creep upward.

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