Mike Novogratz Says Iran's Hormuz Bluff 'Only Works Once,' But Prediction Markets Disagree

Mike Novogratz says Iran made a strategic mistake by showing the world it can shut the Strait of Hormuz.

“You can only bluff people about the Strait of Hormuz once,” the Galaxy Digital (TSX:GLXY) CEO said on the All Things Markets podcast with Anthony Scaramucci.

Gulf States Planning Massive Infrastructure Response

Now that markets know Hormuz can be closed and will be closed, Novogratz expects a massive infrastructure buildout in pipelines and potentially even a canal to bypass the chokepoint, in an effort to become “Hormuz-free.”

Saudi Aramco has already taken emergency measures, converting its East-West Pipeline to full 7-million-barrel-per-day capacity, rerouting crude from the Gulf coast to Red Sea ports at Yanbu.

But the existing infrastructure was designed for a short disruption, not a structural rerouting.

The UAE’s Habshan-Fujairah pipeline runs just 248 miles and carries 1.5 million barrels per day.

It cost $4.2 billion and blew past its budget by nearly a billion. That’s one small pipe in one small country.

Replacing Hormuz’s full 20-million-barrel-per-day throughput would mean building several pipelines that size, plus the export terminals, tank farms, and deep-water loading berths to go with them.

If one small pipe cost $4.2 billion, the total tab for a full bypass network would likely run many times that.

Novogratz acknowledged this won’t happen fast. “It’s not going to be done in 18 months.”

Prediction Markets Still Skeptical On Quick Resolution

Traders on Polymarket price a 64% chance of a US-Iran ceasefire by June 30 and 78% by year-end.

A market on if traffic on the strait returns to normal in April sits at just 32%.

The bill likely lands on Saudi Aramco.

CEO Amin Nasser called this “the biggest crisis the region’s oil and gas industry has faced.” Higher oil prices offset some of that pain in the short term.

But permanently rerouting exports means permanently higher operating costs, more pipeline maintenance, and billions in new port infrastructure.

The engineering contractors would be the clearest beneficiaries.

Saipem (OTC:SAPMY) already has a formal EPC partnership with Aramco in Saudi Arabia. Fluor Corporation (NYSE:FLR) has deep Gulf portfolio exposure.

If the buildout Novogratz describes materializes, the contract pipeline for firms like these could stretch into the tens of billions over the next decade.

If Trump’s campaign succeeds in regime change, the Hormuz threat may recede and the need for this spending goes away.

But if the IRGC remains firmly in control of Iran’s military apparatus, Gulf states might have no choice but to spend their way out of the chokepoint permanently.

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