The ongoing conflict in the Middle East and the partial closure of the Strait of Hormuz have triggered the largest disruption in global oil supply recorded to date, according to Fatih Birol, executive director of the International Energy Agency (IEA). The Strait of Hormuz, situated between Iran and Oman’s Musandam Peninsula, is a critical maritime corridor for energy shipments, with two narrow shipping lanes directing traffic through a channel approximately 54 kilometers wide at its narrowest point.
This waterway is the principal transit route for oil exports from several Gulf countries, including Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, Iraq, Bahrain, and Iran. Although the Strait remains open for some escorted crude oil tankers, the surrounding area is now a high-risk, heavily restricted war zone, leading to a significant drop in shipping activity. Normally, about 20 million barrels of oil pass through the strait daily, but the disruption extends far beyond crude oil to include an estimated 112 billion cubic meters of natural gas shipped annually.
The effects of this disruption ripple across multiple sectors globally. Beyond energy, the Strait of Hormuz is a conduit for critical non-oil commodities such as fertilizers and their feedstocks—including urea and ammonium—along with sulfur, methanol, graphite, aluminum, helium, iron pellets, and components for green hydrogen infrastructure. The World Bank estimates that 60 to 80 countries are directly exposed to supply vulnerabilities stemming from the shipping threats, while the United Nations Conference on Trade and Development (UNCTAD) cites around 61 vulnerable economies struggling to recover from the shock. More broadly, 174 economies face indirect risks related to disruptions in freight, commodities, and food prices.
The disruption has also reportedly damaged up to 40 major energy assets in the region. These impacts are accelerating changes in supply chains globally, highlighting geoeconomic confrontation as a primary risk in the near term, according to the Global Risks Report.
Sulfur, a key material for producing sulfuric acid used in phosphate fertilizer manufacture, is especially affected. Nearly half of the global sulfur supply transits the Strait of Hormuz. Sulfur is also vital to electric vehicle batteries and renewable energy storage, making shortages likely to drive up costs in diverse industrial sectors, including transportation and agriculture.
Methanol, which is used in producing plastics, resins, synthetic fibers, and paints, also depends heavily on Middle Eastern exports, with roughly one-third of global trade passing through the strait. China, as the largest consumer and importer of methanol, could face difficulties should these disruptions persist.
Fertilizer exports from the Arabian Gulf constitute at least 20% of the global seaborne supply. Shortages in urea, a nitrogen-rich fertilizer essential for modern agriculture, are already affecting supply chains worldwide, including in large economies like the United States, where nearly half of global fertilizer trade is linked to this region. These disruptions may intensify inflationary pressures and increase costs for food production.
Aluminum production, accounting for about 9% of the primary global output in the Middle East, may also be impacted. Aluminum is widely used across transportation, construction, and renewable energy infrastructure, all sectors sensitive to supply constraints. Helium, a by-product of natural gas processing and critical for semiconductor manufacturing, fiber optics, and transport technologies, is primarily produced by Qatar, which supplies about one-third of the world’s helium.
The Gulf region is also a key supplier of reduced-iron and iron pellets for the steel industry. Given the thin profit margins in the shipping sector, ongoing freight uncertainties, extended delivery times, and rising shipping costs risk further destabilizing global supply chains.
Experts emphasize that adapting to this crisis will require diversification of supply sources, alternative transportation routes, the establishment of strategic reserves, and strengthened resilience in global supply chains to mitigate the widespread economic effects tied to the Strait of Hormuz disruption.