How to get through the Strait of Hormuz

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This is Planet Money from NPR. Right now, as we record the show Tuesday, April 14th around 2 PM Eastern, Iran and the US are still blocking marine traffic from leaving the Persian Gulf.

“We have no idea how this is going to play out, but we do know that it will have huge implications for the global economy.”

And for this guy. Testing one, too. Okay. It's recording. Who are you and what do you do? A Christian St. Clair. I'm the production manager at Fanographic Spooks.

Yes, books, but hold on. This is not a show about the Planet Money book. It's about two books that Christian from Fantographics has been working on. That are weirdly connected to the war between the US and Iran.

I first called Christian a little over a week ago, just before the ceasefire was announced.

And he told me about the books in question. One is Roberta Gregory's bitchie. It's a collection of kind of feminist comics. And then another one is Adventures into Weird Worlds. The books were printed in India, and Christian got word in February that they were on schedule to be put on an enormous

and very, very hot pink container ship called the One Majesty. And would get to the US in early April, right on time for a book launch party. And then the war started and Iran effectively cut off these skinny waterways ships used to get in and out of the Persian Gulf. The street of Hormuz, not too long after. Christian was at a production meeting and a colleague asked,

"Do any of our books go through the straight of Hormuz?" And I was like, "No, I don't think so." I was like, you know, they usually just go straight through the Suez. And yet a couple weeks later, Christian was wondering about the status of those books, and he googled the name of the bright pink ship, though, One Majesty.

I just thought it would like show up on vessel-founder like it always did.

But I just plugged it in again. Only this time, it's like, you know, it's like Ouga. One Majesty has been attacked in the strain of Hormuz. And I was just like, "Oh my God, you've got to be kidding me." Christian learned that the crew was safe, the cargo, too. Apparently the attack left the ship with just a small hole in it.

But it was not going anywhere anytime soon. It was stranded in the Persian Gulf. I mean, Christian sitting at his desk in Seattle, he knew these books were not a big deal in the grand scheme of things. There was a war going on. People were dying. Iran's blockade of the straight had cut up 20% of the world's oils apply,

“and other important commodities, like helium and fertilizer.”

No, for Christian, like many of us, the experience of the war has been kind of removed. We've mostly seen it at, you know, the gas pump. Christian has seen it with these books, which he kept checking on every day by looking up the status of that bright pink ship. For a long time, if you looked up that particular ship on the marine tracking websites, it just kept pushing out the arrival date by day, even though you knew that was not going to happen.

I was full of thinking. And you know, and it's still literally showing it in the straight of Hormuz. And then I just checked it and it now says, like, the ship is location unknown. Ain't that a metaphor? Hello and welcome to Lady Money.

I'm Nick Boutton. As we tape this show, US warships are continuing their blockade of Iran. Iran still controls the straight of Hormuz and a big portion of global commerce is still stuck.

Today on the show, we're going to focus on a key sticking point between the US and Iran.

The future of the straight of Hormuz.

“And ask, how have ships been getting through the straight?”

What does Iran's control of it mean for the global economy? And what's happening with Christian's books and that bright pink ship? The US has been at war with Iran since February 28th. And for that month and a half, Iran's main leverage over the US has been their control over the straight of Hormuz. They've attacked ships that try to pass without approval.

And recently, they've insinuated that one part of the straight, the partner Oman, is not safe. Like, maybe there are mines? Which means captains have to go right by Iran's shores to get through the straight. Effectively, creating a choke point for the global economy. Last week on Tuesday, when President Trump announced a ceasefire, he said the Iranians had agreed to completely open up the straight.

But the next day, ships in that area got a very different message. Transiting in the straight of Hormuz is closed. Transiting in the straight of Hormuz is closed. Transiting in the straight of Hormuz is closed. If any President tries to challenge,

if any vessels try to transit without permission, they will be destroyed. Which was kind of a clue that some ships were able to get through with permission. Maybe this was a way out for the bright pig chip. I wanted to figure out how that permission works. How do you get it? And what is it cost?

So, I started calling around. Hello? Yes. This is Nick Fountain.

“I was honestly kind of surprised to get Hamid Husani on the phone.”

He's not a government official, but he is very well connected in the oil and gas industry. He's a spokesperson for Iran's oil, gas, and petroleum products, exporters union. Oh, backs. Where are you located these days? Are you in Tehran? Yes, I'm in Tehran. And how has the last month and a half been for you?

Okay. We must care about ourselves. But for Iranians, it's normal. Don't worry about us. Okay. You are safe. Hamid seemed relieved for the ceasefire. Excited to be a little less on edge. What do you do for fun?

Phone? I'm a play football. Football? Are you good? What is your record?

“All our players is more than 40 years. We are all man. We are not doing anything.”

You're the old guys. We play with old guys. But back to the straight apartments. Hamid confirmed, yes, there is basically a toll system. In fact, he said, just the other day, I friend of his and Indian guy went through the straight and told him how it works. The friend had a ship full of oil, and that ship had been stuck in the Persian Gulf since the beginning of the war.

But he wanted to get it out. He wanted to get it to India. So the friend got in touch with the Indian government who helped him broker-deal. He explained to me that he contacted with the, the visual record to separate Navy, separate Navy.

Okay. The separate Navy is part of the most powerful military body in Iran, an organization called the Islamic Revolutionary Guard Corps.

Okay, I contacted them and informed them. I am interested to post the, uh, horrible. Pass through the straight. Yes. Hamid's friend got word that it was possible. But first, he had to send some information. Like ship name, country that it's flagged. Where it's headed.

What's on board? Who's on board? The team. Okay. That's working in the rest of it. Hamid said the Iranians were mainly checking to make sure the captain and the crew weren't from the US or Israel or Iran. Iran's other adversaries. And that the ship and cargo weren't affiliated with those countries too. That we said, as far as he knows, the Iranians authorities were not verifying what and who was on the vessels by boarding or sending drones.

For Hamid's friend and the ship, everything checked out. They check everything about personal, about vessel, about flag, about owner, about destination of the cargo, then they check everything. Then they approved. They approved. But his friendship could not pass yet. First, he had to pay a toll.

Before posting as king pay for each, uh, barrel, one barrel, one dollar. Hamid's friend told him the ship had to pay one dollar per barrel of oil. And keep in mind, these ships, they are big.

Very large crude carriers or BLCCs carry two million barrels of oil. So these tolls could be as much as two million dollars each time.

Hamid's friend told him, he told me pay by crypto.

Crypto? Yes. But it leave me time, they gave him a very leavey time, only five seconds. Five seconds. There are a couple reasons to not use dollars. Crypto helps everyone avoid US sanctions. And also let's the Iranians move the money quickly.

“Five seconds is extraordinarily quick. Was that an exaggeration?”

He told me, I don't know about the paid. He was successful to pay.

Hamid says his French oil ship sailed through and made its way to India.

So you got this information from a person who had an oil tanker. It's also a step on Navy. They confirmed that this is the process. Hamid told me his contact at the Iranians at the Navy said, this is the system. I asked Hamid to connect us with his Navy source who gave him this info. He wouldn't same to with his Indian friend with the oil tanker.

Before I let Hamid go, I told him about Christian and the comic books stuck on the bright pink ship in the Persian Gulf. And he was like, oh, but it's in touch. Maybe maybe can help him, maybe can help if he's in information, maybe we be able to help him. Seriously? Yes. If destination was not USA. No problem. Destination is New York City. Maybe let's see what we'll happen.

Basically, Hamid is saying, since the ship is going to the US, Christians only hope might be successful negotiations between the US and Iran.

Okay, stay safe and thank you so much for the time. Okay, bye bye. So it seemed unlikely that Hamid could help Christian and the bright pink ship. I also tried reaching out to the shipping company that owns the one majesty, and they said they wouldn't comment on the status of the ship.

“But there was one person I wanted to check with. Am I coming through your headphones?”

Yes. Perfect. Let's do this. Who are you and what do you do? Ryan Peterson founder and CEO of LexPoor. We've had Brian on the show before. And the reason I call them is because his company is at the center of global logistics and shipping. They have containers going every which way at any moment. He has sources at every major shipping company. He is very keyed into this stuff. I asked right. Hey, do you know what's happening with the bright pink ship, the one majesty, the ship that might have Christians books on it?

And he was like, no, we do have some containers stuck in the go, just not on that ship. But he did have some info for Christian and it was not good. Apparently when a ship is damaged, like the bright pink ship was the ship owner might use something called the law of general average. And what general average says is that if there's damage to some cargo on the ship, it's shared equally across all of the people who have cargo on the ship. You all share in this together, including damage to the ship itself. It's actually you as a customer of the ship are liable and you're on the hook.

For that damage, if the law makes it makes sense in that if there's a disaster at on the high seas. The last thing you want is the sailors that captain thinking about which cargo to throw overboard in order to save the ship. You just like just throw the cargo forward. And we'll figure it out later. Which means Christian and his comics publisher or their insurance company could be on the hook for damages sustained to the bright pink ship. But while we had Ryan on the line, might as well ask him the big question.

What does a potential toll booth in the straight of or moves mean for global shipping and the global economy? He was like, well, on one level, it might just mean one more fee that makes everything a little more expensive. But also, it might mean a huge shift because for 70 something years, the US Navy has been guaranteeing the free flow of goods throughout the world's waterways. We really kind of take it for granted that anybody can just sail anywhere and nobody's going to attack your ships and there won't be pirates and other countries, Navy's attacking you.

This is a pretty new phenomenon. And so this is a huge challenge to that order, which says, well, maybe the US Navy can't guarantee freedom of navigation anymore.

“How important is this freedom of navigation freedom of the seas for global commerce?”

It's the heart of globalization. And so in his global commerce and some level is the modern world that we're all used to. Yeah, the modern global economy requires the free flow of goods around the world. And that is in the balance right now, which might explain why the Trump administration has made opening up the straight up priority in their negotiations with Iran.

Because freedom of the seas is such a big deal.

I mean, it would be really big deal if you had a state and Iran that is now able to kind of dictate terms to the United States of America as the end of American order. Like that's the big deal. Like the dollar value of the toll, like doesn't really matter. But if you're saying, hey, the US Navy is no longer the big boss of the seas, like, wow, that really changes quite a few things.

“I think would cause a lot of companies that are thinking in a big system's big picture kind of way to say, hey, maybe doing global long distance trade is too risky.”

Maybe we should think about regional supply chains, maybe the US American companies are starting thinking about manufacturing in Latin America or even back in the US. And that would be an enormous shift. Speaking of enormous, after the break and update from Christian on his books and the bright pink ship, he's got some news. Hey, how's it going? Good. How about you? Good.

“A few days after I first talked with Christian, the Carmer Sky, I got him back on the line.”

I was excited to tell him about all I learned. The bad news about the law of general average about what I learned about the tolling system from homied and his sort of offer to smooth things over. But before I got to any of this, Christian told me that he had news. The books all the time were in India. What? Yes. Apparently the books were in India. Christian had thought that they made it onto the bright pink ship, the one majesty, but that ship got way laid in the Persian Gulf.

The ship never even made it to India. So the books never got loaded onto it.

They were never on the ship. No, they were never on the ship. What a relief. Yeah, no, no potential toll fine. No toll, no law of general average, no blockade. In fact, just the day before, the books have been loaded onto a different ship. Also bright pink. Apparently that's the vibe of the ship and company.

The ship has officially set sail. They're on their way. Yes. Incredible.

He said he's hoping the books will only go on sale about a month late. If this current sailing schedule holds, which I am pretty confident at this point, it will mid mid July.

“You're confident in anything in global shipping at this point?”

Well, there's only so many things that can go wrong with one particular book. So I feel like these books have exhausted that. Negotiations between the US and Iran broke down over the weekend. And a big sticking point is the future of the state of Hormuz. If and when negotiations start back up, they're kind of four main options for the straight. And open waterway with no tolls. A toll booth where Iran gets the tolls, when where the US gets the tolls are, I don't know, one where they split them. All we do know is that the fate of global commerce and the global economy kind of depends on how it all shakes out.

Hey, fellow Southern Californians. Thursday, the 16th of April, aka this week, Sarah Gonzalez, Jack Corbett, Alex Mayossi, myself, are going to be with a very special guest live on stage. Jack and about the planet money book. And there's also more tour dates throughout the rest of the country and one even in Canada that should be equally as cool. This episode of Plano Money was produced by James Sneed. It was edited by Jess Zhang, fact checked by Sarah Waters and engineered by Quacy Lee. Our school mark is our executive producer. I'm Nick Fountain. This is NPR. Thank you for listening.