On April 12, US President Donald Trump announced a blockade of “any and all Ships trying to enter, or leave, the Strait of Hormuz.” Even before the announcement of the blockade, few ships had been transiting the waterway, as for weeks now Iran has issued its own threats to attack vessels that didn’t pay a multi-million-dollar toll. The net effect of these Iranian and US efforts is an effective shutdown of what had been one of the world’s most critical commodity corridors.
In addition to the ongoing disruption to supplies of crude oil and liquefied natural gas, the strait’s closure affects other important commodities as well. Before the Iran war, the Gulf supplied roughly 20 percent of global seaborne jet fuel, 10 percent of seaborne diesel, 23 percent of ammonia demand, and 33 percent of helium production. Half of global seaborne sulfur came from the Gulf, too, as did 9 percent of the world’s aluminum.
In effect, the collapse of shipping through the Strait of Hormuz is two problems at once. The first problem is the immediate supply shock for several important global commodities, from ammonia to aluminum. Producers around the world are scrambling to find other sources for these commodities. The resulting competition increases the costs for producers, who in turn pass these costs on to consumers.
The impact of this scramble will not be uniform. Wealthier nations may outbid competitors in commodities markets, securing what remains at a premium. Middle-tier economies will absorb higher costs through rationing and reduced consumption. But the most vulnerable populations will simply go without, not as a policy choice, but as an outcome of limited supply.
The second problem is that even if the strait were to reopen soon, the underlying supply and logistical stresses of the waterway’s closure will likely persist for months. Much of the region’s refining capacity has been damaged or destroyed during the conflict, and the infrastructure required to process and export commodities may take years to fully rebuild. On top of that, the duration of the strait’s closure and the state of the US–Iran conflict when the waterway is reopened will affect how quickly shipping returns. For example, a prolonged closure during which alternative supply chains improve, coupled with a fragile cease-fire where attacks may resume, could make companies wary of returning to the strait.
Dealing with both problems requires first recognizing the scale of the disruption. The fifteen graphs below help illustrate the global impacts of the Iran war and the closure of the Strait of Hormuz on supply chains for essential commodities.
