Hormuz: the supply chain takes the hit, the bill is already here

There are two clocks in a chokepoint crisis, and they do not tick at the same speed. The first is the price clock, financial, which calms the moment a deal is signed. The second is the clock of holds, tanks and quays, physical, which takes months to recover. The mid-June US-Iran agreement, analysed in our three reopening scenarios, stopped the first. The second keeps running. In early July 2026, the war premium has left the barrel, but the global supply chain is still digesting the largest logistical rupture in its recent history.

A narrow strait, an outsized share of the world

The Strait of Hormuz is only about fifty kilometres wide, with navigation channels barely a few kilometres across. Through this bottleneck passes a share of the world economy out of all proportion to its size. The International Energy Agency measured in 2025 an average flow of about 20 million barrels of crude and refined products a day, nearly a fifth of world oil consumption and about a quarter of oil carried by sea. On gas, nearly 20% of world liquefied natural gas trade depends on it, Qatar routing almost all of its exports through it.

The dependence does not stop at hydrocarbons. According to the World Economic Forum, up to a third of world trade in fertiliser raw materials passes through this strait, not counting methanol, aluminium, sulphur or graphite. Hormuz is not only an oil tap: it is an artery of planetary agricultural and industrial production.

It is this concentration that makes the strait indispensable: there is no plan B on the scale needed. The Saudi and Emirati pipelines that bypass Hormuz cap, according to the IEA, between 3.5 and 5.5 million barrels a day. Against a flow of 20 million, that leaves a potential deficit of 14 to 16 million barrels a day that no infrastructure can absorb. The point is developed in our state of the blocked chokepoint.

February, the flash closure

The sequence was brutal. On 28 February 2026, US and Israeli forces strike Iran. In less than forty-eight hours, Tehran threatens navigation and the strait de facto closes to commercial traffic. The planet’s top four container-ship operators, Maersk, MSC, CMA CGM and Hapag-Lloyd, suspend their transits. From 5 March, hull-and-machinery insurers stop covering the passage, and tanker traffic falls to near zero.

Over the duration of the blockage, about 95% of tanker transits and nearly 99% of LNG were rerouted, an order of magnitude confirmed by IEA director Fatih Birol, who calls it the largest supply rupture in the history of the oil market. The difficulty is aggravated by a second maritime front. For the first time in modern history, the two great Middle East corridors are blocked at the same time: the Red Sea, already disrupted, was running at only 49% of its pre-crisis capacity. Ships linking Asia to Europe or the US East Coast had to route around the Cape of Good Hope, adding 10 to 14 days to each rotation.

The cost of the detour

A two-week detour is paid not only in time. It is paid in fuel, insurance and immobilised capacity, and this bill has already fed into transport prices. The war-risk premium to cross the strait, around 0.125% of the vessel’s value before the strikes, had already climbed to between 0.2 and 0.4% per passage in the days before 28 February, before coverage disappeared altogether.

Behind the indices, there are crews. At the height of the blockage, in early May, more than 1,550 merchant vessels were immobilised in the zone, with some 22,500 seafarers stuck on board, according to maritime organisations’ counts. Insurance is the real lock. Without hull-and-machinery cover or protection and indemnity, no owner commits a vessel worth several hundred million dollars, whatever the freight rate offered. It is this insurance impossibility, even more than the military risk itself, that emptied the strait: you can charter a ship to brave threats, you cannot sail it without an insurer behind it.

Container freight followed. The benchmark index of rates from Shanghai, the Shanghai Containerized Freight Index, reached 2,572 points in the week to 30 May 2026, up 16% in a week and double its level of late February, just before the strikes, according to Lloyd’s List. Shippers see the surcharges stack up: a war-risk surcharge of up to $1,500 per TEU on Gulf-linked routes, an emergency bunker surcharge triggered by the doubling of the price of very-low-sulphur marine fuel, and an emergency freight hike of $3,000 per FEU or more for Persian Gulf freight.

The mechanism is simple to follow: carriers pass on to their customers the more expensive fuel and the extra days at sea. These extra costs end up in the price of imported goods, with the usual lag of a few weeks to a few months between a ship’s deck and the shelf label.

The gas wave reaches Europe

No region illustrates the propagation better than the European gas market. Qatar, whose cargoes take Hormuz, suspended part of its production under force majeure, removing at a stroke nearly a fifth of world LNG supply. The European benchmark price, the Dutch TTF, jumped 35% in a single session to exceed €60 per megawatt-hour, and 76% over the week.

The prolongation scenarios are dizzying. A three-month halt of Qatari exports would take the TTF to around €155 per megawatt-hour, triple the pre-crisis level near €50. A six-month blockage would raise fears, according to analysts cited by the European press, of a 2022-style squeeze or worse, with averages around €160 and possible spikes beyond €200. The IEEFA estimates that the Hormuz disruption alone puts about 10% of Europe’s LNG imports at stake.

A shock absorber exists: the new American terminals take North American production to a record and partly offset the Middle Eastern losses. But since LNG often sets the marginal price in Europe, the European benchmark price should still climb about 25% over 2026. The absorber limits the damage, it does not cancel it.

Fertiliser and food: the shock that reaches the field

The least visible consequence from Europe is perhaps the heaviest elsewhere. Since up to a third of fertiliser raw materials transit Hormuz, deliveries of ammonia and nitrogen compounds contracted at the worst moment of the agricultural calendar. In Bangladesh, the closure of several state fertiliser plants disrupted national production during the winter-rice season, creating immediate pressure on farmers.

The United Nations warns that, if the crisis drags on, 9.1 million more people in Asia could fall into acute food insecurity. The timing is cruel: the disruption coincides with decisive planting windows. A farmer facing more expensive or unavailable fertiliser cuts inputs, sows less or switches crops, all decisions that will weigh on yields in the months to come. The energy shock thus turns, with a lag, into a food shock.

Beyond oil and gas: chemicals and batteries

The strait does not only carry energy and fertiliser. The World Economic Forum lists at least four other disrupted industrial links, often ignored because they are invisible to the end consumer. Methanol first, a base building block of countless plastics, paints and solvents, of which the Gulf is a major supplier. Aluminium next, whose regional flows feed industry, construction and packaging. Sulphur, that refining by-product used to make sulphuric acid and, at the end of the chain, phosphate fertilisers, closing the loop with the agricultural crisis. Graphite finally, a key material for lithium-ion battery anodes, whose scarcity hits the energy transition and electric-vehicle manufacturing head-on.

Each of these links has its own propagation lag, from ship to finished product, but all tell the same mechanic: a transport shock concentrated on a single point diffuses, step by step, to value chains with no apparent connection to oil. A European battery plant, an Asian paint maker and an African fertiliser producer discover that they share, without knowing it, the same bottleneck.

The shock is already in the figures

The usual objection would be to say that all this remains theoretical as long as the truce holds. The data say the opposite: the bill is already partly paid. US inflation bears its mark. In May 2026, the consumer price index came in at 4.2% year on year, its highest since April 2023, driven by energy up 23.5%, a sequence described in our guide on reading the CPI. Fuel made more expensive by a supply shock propagates mechanically to consumer prices.

The signal also appears upstream, in import prices, whose monthly rise surprised, as we analysed in the fine print of import prices. And it reads in the physical flows: Chinese crude imports fell to their lowest since mid-2022, China preferring to draw on its stocks rather than buy at high prices. The Asian bill of the shock and the copper-shortage risk extend the same wave. The crisis is not a future risk to monitor: it is a present cost already spreading among importers, industrialists and households.

For central banks, this type of shock is the most uncomfortable there is. A supply shock pushes prices up and activity down at the same time, the very definition of stagflation. Tightening monetary policy to counter imported inflation worsens the brake on growth; loosening it to support activity lets price expectations slip. The Federal Reserve chaired by Kevin Warsh, whose first FOMC we described, inherited this dilemma at the precise moment it intended to normalise its policy. The Strait of Hormuz has, in a few weeks, taken from central bankers the luxury of a simple choice.

A reopening that is not really one

That leaves the question of the present. The mid-June truce did trigger a recovery, but it is partial and fragile, and maritime players speak of controlled access rather than a reopening. In early July 2026, traffic in the strait still runs at around a third of its normal level. On 27 June, the joint maritime information centre supervised by the US Navy widened a route near Oman to ease passage, but confidence has not returned: Iran for a time reclosed the strait, denouncing Israeli strikes it said contradicted the deal.

The result is visible at anchor. About 3,200 vessels, including nearly 800 tankers and cargo ships, still wait west of Hormuz, and the major transhipment hubs like Jebel Ali in Dubai are congested by the diversions. Above all, a good part of the owners have already rebuilt their schedules, contracts and fuel procurement for the rest of 2026 around the Cape of Good Hope route. Undoing these arrangements takes time, and that is why, as academic research sums up, the strait can reopen without global shipping returning to normal for months.

The other reading: the shock absorbers

For the sake of fairness, one must carry the opposite reading, because not everything gave way. Several shock absorbers worked, and ignoring them would give a falsely apocalyptic picture. Strategic reserves allowed the large importers to hold without immediate rationing, China first, which largely lived off its stocks accumulated at low prices. The ramp-up of US LNG, to a record level, partly replaced the missing Qatari cargoes. Shale oil and the barrels OPEC+ put back on the market added supply when it was missing. And the diplomatic de-escalation came sooner than anticipated, before reserves ran out.

The disaster scenario, that of a total closure prolonged over six months, with the barrel durably above $130 and the TTF at €200, therefore did not happen. Some analysts draw an optimistic conclusion from this: the system proved more resilient than feared, and the logistical adaptation, however costly, did its job. This reading is solid, and it deserves to be set against the previous one. But it only fixes the upper bound. To say the shock was absorbed is not to say it was painless: between the disaster averted and the return to normal lie precisely all the costs described above, which are very real.

The assessment, on two horizons

Two lessons stand out. In the short term, the gap between the two clocks is the real subject: oil prices have largely erased the conflict premium, falling back from their April peak above $106, but the logistical cost remains inscribed in freight, insurance premiums, European gas and fertiliser. Whoever reads only the Brent curve will wrongly conclude the crisis is behind us. The mechanics of the oil market and this deceptive reading are detailed in our guide on reading the oil market.

Over the longer term, Hormuz recalls an uncomfortable truth about globalisation: its productivity rests on a handful of chokepoints, none of which has a genuine substitute. Concentrating a fifth of oil, a fifth of gas and a third of agricultural inputs in a channel a few kilometres wide creates a formidable efficiency in normal times and an equally formidable fragility in times of crisis. The ceasefire stopped the bleeding. It did not close the wound, and above all it did not make the system less vulnerable to the next shock.

Sources

1. IEA, weight of Hormuz in oil and LNG, scale of the rupture (Fatih Birol, largest disruption in the history of the oil market), bypass pipelines of 3.5 to 5.5 Mb/d: https://www.iea.org/
2. U.S. Energy Information Administration, Hormuz flows around 20 million barrels a day and rise in international LNG prices during the closure: https://www.eia.gov/todayinenergy/detail.php?id=67604
3. World Economic Forum, “Beyond oil: 9 commodities impacted by the Strait of Hormuz crisis”: LNG, fertiliser (up to a third of world trade in raw materials), methanol, aluminium, sulphur, graphite: https://www.weforum.org/stories/2026/04/beyond-oil-lng-commodities-impacted-closure-hormuz-strait/
4. UNCTAD, “Hormuz disruption deepens global economic strain across trade, prices and finance”: implications for trade, prices, freight and developing countries: https://unctad.org/news/hormuz-disruption-deepens-global-economic-strain-across-trade-prices-and-finance
5. UN News, “Despite ceasefire, Hormuz tensions continue to throttle supply chains worldwide”: estimate of 9.1 million more people in acute food insecurity in Asia, closure of fertiliser plants in Bangladesh: https://news.un.org/en/story/2026/04/1167365
6. SeaVantage, chronology of the crisis: 28 February strikes, closure in 48 hours, suspension by Maersk, MSC, CMA CGM and Hapag-Lloyd, cancellation of cover on 5 March, Red Sea at 49%, lengthening of 10 to 14 days: https://www.seavantage.com/blog/strait-of-hormuz-crisis-2026-shipping-disruption-timeline
7. Lloyd’s List, rise in container freight rates: Shanghai Containerized Freight Index at 2,572 points in the week to 30 May 2026, up 16% in a week and double the late-February level: https://www.lloydslist.com/LL1157327/Hormuz-crisis-side-effect-a-sharp-rise-in-container-shipping-rates
8. Freightos, surcharges applied to shippers: war risk up to $1,500 per TEU, emergency freight hike of $3,000 per FEU, doubling of marine fuel: https://www.freightos.com/freight-industry-updates/market-updates/the-strait-of-hormuz-and-the-container-market-what-you-need-to-know/
9. Euronews, European gas: Qatari suspension, TTF up 35% in one session above €60 and 76% over the week, scenarios at €155 then €160 to more than €200: https://www.euronews.com/my-europe/2026/03/26/europes-gas-prices-on-the-brink-as-qatari-lng-flows-stall
10. CNBC, gas and LNG surge on Middle East supply fears, Hormuz’s share of world LNG: https://www.cnbc.com/2026/03/03/middle-east-war-gas-energy-lng-drone-qatar-strait-hormuz-price-shock.html
11. IEEFA, the Hormuz disruption puts about 10% of Europe’s LNG imports at stake: https://ieefa.org/resources/strait-hormuz-disruption-would-jeopardise-10-europes-lng-imports
12. World Bank, “Strait of Hormuz disruption sends natural gas prices surging”: https://blogs.worldbank.org/en/opendata/strait-of-hormuz-disruption-sends-natural-gas-prices-surging
13. The Conversation, “The Strait of Hormuz is reopening, but global shipping won’t return to normal for months”: controlled access, schedules rebuilt around the Cape of Good Hope for 2026: https://theconversation.com/the-strait-of-hormuz-is-reopening-but-global-shipping-wont-return-to-normal-for-months-285313
14. UK House of Commons Library, “Israel/US-Iran conflict 2026: Reopening the Strait of Hormuz”: widened route from the joint maritime information centre on 27 June, partial and fragile reopening: https://researchbriefings.files.parliament.uk/documents/CBP-10636/CBP-10636.pdf
15. BLS, May 2026 CPI release: index at 4.2% year on year, energy at 23.5%, cited via our CPI reading guide: https://www.bls.gov/news.release/cpi.nr0.htm