Why the Hormuz toll trade is the easiest money of the year
The United States has never signed the treaty that governs the Strait of Hormuz, which cuts in a direction few expected
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Last Friday, only five vessels crossed the Strait of Hormuz in 24 hours. Polymarket's US charges Hormuz fees market did not move a cent. Its December leg costs 9 cents, so betting no fee ever gets collected returns about 8.7% on December 31, or 1.8% by the end of August.
The market settles yes only if the United States government "collects a payment" from a shipping company, a vessel, or a foreign government, for transit through the strait or for protecting ships in it.
- On July 13, Trump posted that America, as "The Guardian of the Hormuz Strait", should be reimbursed at 20% on all cargo shipped
- Qatar's emir called him the next day, and Trump replaced the fee with trade and investment deals
- The United Nations shipping agency said there is no legal basis for tolls to transit a strait, and Hapag-Lloyd called charging for international waters fundamentally wrong
- The part of the law of the sea covering Hormuz says passage shall not be impeded and sets no charge. America has not signed that treaty and does not border the strait
- America escorted 11 Kuwaiti tankers through the same water in the 1980s, spent about $240m and collected nothing from Kuwait or any shipowner
Out of the two doors that lead to a yes (collecting payment for transit or for protection), Iran stands in front of both.
The first is Tehran giving up the water. Iran is 1.6m square kilometers and has 90 million people, and last year's war ran for months with American and Israeli aircraft hitting its nuclear sites. It ended with the government standing and the strait still Iran's to close. The same thing is happening right now since February. Nobody is handing Washington that tollgate.
The second door is money for protection rather than passage, which is the only actual risk here. The rules count payment for "the protection of shipping", in cash or in kind, even if a contractor collects it. American warships have escorted merchant ships there since May 4 and billed nobody.
It's because Iran already collects a toll there, and money paid to Iran does not count here. A shipowner who is already paying 7.5% to 10% of hull value in war-risk insurance is not shopping for a third bill. Paying Tehran and sailing on is the cheaper, hassle-free alternative.
This page does not constitute investing advice. Prediction markets and/or gambling may result in loss of funds. You are advised to conduct your own due diligence before taking any action.
