Viral research firm Citrini sent an analyst to the Strait of Hormuz. From smugglers to Iranian drones, here's what they found.

• The Strait of Hormuz has become a critical front in the Iran war and the global energy crisis.
• Citrini Research sent an analyst to the shipping channel to find out the situation on the ground.
• "Analyst #3" reported that Iran has established not a "blockade" but a "toll road."

The Strait of Hormuz has become a virtual black box. Citrini Research just cracked it open.

The world's most important shipping channel for oil and gas has become a key front in the war between Iran, the US, and Israel. The threat of being struck by an Iranian drone, blown up by an underwater mine, or hit by a missile launched from the coast or a passing speedboat has spooked shipping companies, causing a sharp reduction in traffic through the strait. That has driven up energy prices and raised fears of inflation and recession in recent weeks.

Citrini Research is best known for shorting Silicon Valley Bank before it imploded in 2023, and for sounding the alarm in February on the potential for an AI-driven recession and stock-market crash.

The firm recently dispatched an analyst to the Strait of Hormuz to find out the truth of the situation on the ground, producing a lengthy report detailing an analyst's experience, which he wrote included smugglers, a speedboat trip into the strait, and an interrogation.

"It was clear that nobody — literally nobody, not the analysts, not the correspondents, not the retired generals doing hits on cable news and least of all us — actually had any idea what was going on," the writer, dubbed "Analyst #3," wrote in Citrini's latest Substack post.

"Everyone was working from the same stale satellite imagery and the same unnamed Pentagon sources and the same AIS shipping data, which, as I would later discover, was missing roughly half of what was actually transiting the strait on any given day," he added.

Analyst #3, who says he is fluent in four languages, wrote that he embarked on his adventure last month with "a Pelican case full of equipment, a pack of Cuban cigars, $15,000 in cash and a roll of Zyn."

He said his trip took him to the "most consequential waterway on earth, during a live war," where he "talked his way onto a rickety speedboat with no GPS, defied advice from Omani officials to turn back, and rode on the open seas eighteen miles from the Iranian coast while Shahed drones flew overhead and Revolutionary Guard patrol boats ran patterns in the distance."

The analyst said he flew to Dubai and crossed into Oman, managing to sneak recording equipment past border officials. He then drove to a hotel on the coast where he was "one of two guests in a hundred rooms," he wrote in his report.

He said he met a group of Iranian smugglers who run contraband to Iran, such as electronics, cigarettes, and alcohol, every day, and convinced one to give him a ride on a speedboat into the strait.

Analyst #3 said he was interrogated by the CID, the Gulf equivalent of the CIA, the next morning.

"On the way out, having apparently decided I was more idiot than spy, they delivered the real blow: 'We know about your boat trip. Cancel it. You're not going,'" the analyst wrote.

He said he defied their advice and went out on what "turned out to be a forty-year-old dinghy with a few-hundred-CC engine and no GPS — everything by feel, navigation by a lifetime of knowing these waters and a shitty radio half-lashed to the hull."

The analyst also said he interviewed fishermen in Kumzar, a remote village, who reported a higher — and growing — volume of vessels crossing the strait than official data suggested.

These conversations, he said, indicated that Iran was exerting its authority by demanding vessels line up to secure its approval to traverse the strait, and only using its drones to strike boats that don't follow its rules.

Those he spoke to said that was part of an effort by Iran to portray itself as rational, organized, and in control while painting the US as chaotic and unreliable, he said.

"This is the difference between a blockade and a toll road, and the market has been pricing the former while the reality on the water is setting up to look a lot more like the latter," the analyst wrote.

He said he then took a boat out onto the strait, saw Iranian drones flying overhead, and spotted ships that don't show up on tracking platforms.

"If you want a single image that confirms the thesis that the strait is reopening under Iranian management, it's a Greek tanker running full speed through the center of Hormuz while drones fly overhead and everyone else hides along the edges," he wrote.

He wrote that a boat drove directly towards him from Iran and that he thought it was all over, but in the end, it was just a smuggler. He added that he was intercepted by the coast guard on the way back.

"They told me I was a moron, they were keeping the phone, and if they found anything incriminating I'd be prosecuted."

Data and debrief

The Citrini analyst said he counted 15 ships crossing the strait on April 2, and his contacts said another 15 to 18 ships crossed on April 4, or the "prior week's worth of traffic in two days." That was still down from more than 100 per day prior to the war.

Citrini said it debriefed its analyst for eight hours. The main takeaway was that the war was likely to escalate, but traffic through the Strait of Hormuz would increase anyway, as Iran doesn't want the conduit closed and wants traffic to recover with it in charge.

"The range of outcomes reduces to this: either the US sends Iran to the stone age, in which case they lose all capacity to enforce sovereignty and the strait reverts to open passage under American security, " Citrini wrote.

"Or the conflict drags on, becomes expensive and unpopular, and Iran gets some version of what it wants — the strait reopening under Iranian management," it added.

"The complex reality is that the strait is not fully closed and is likely to see traffic pick up, but that the conflict is unlikely to resolve neatly and quickly," Citrini wrote. "That's difficult to translate into the next 100 points for SPX, but it's what's happening."