Hormuz Disruption Threatens Global Oil, Food, Chip Supply Chains
The narrow waterway handles roughly a quarter of all seaborne oil trade worldwide and carries a substantial share of global fertilizer supply — making its disruption a systemic threat to both energy and agricultural markets simultaneously.
Sadi Kaymaz, an Asia markets analyst, told media that supply losses are already materializing at alarming scale, with fertilizer markets bearing some of the heaviest damage.
"Producers in the Persian Gulf account for 45% of global urea trade," Kaymaz said, referring to the most widely used nitrogen fertilizer.
"More than half of this production has been shut down, and facilities that continue to run are unable to deliver their products due to the blockade in the Strait of Hormuz – leaving a massive amount of product stranded in the Gulf," he added.
The numbers are stark. Only 11 fertilizer-carrying vessels have successfully transited the strait since hostilities erupted in late February — just four of which carried urea. "A total of 44 fertilizer ships, half of which have urea onboard, are stranded," Kaymaz said. "Restarting nitrogen plants is very difficult in this climate. Even if the war ends, it will take a lot of time for capacity to return to pre-war levels."
Compounding the fertilizer crunch, China has largely suspended its own fertilizer exports amid tightening urea supply and climbing prices domestically — a policy shift analysts warn is dramatically amplifying risks to global food security. Agricultural productivity is expected to suffer for at least a year, given the rigid seasonal cycles governing crop production.
Chip Supply in the Crosshairs
The crisis is also threatening global semiconductor production. Industrial gases — neon, krypton, and xenon — which are critical inputs for chip manufacturing, are byproducts of natural gas extraction in Qatar. Any sustained halt to shipments risks cascading disruptions across global chip supply chains, including those underpinning artificial intelligence infrastructure, analysts caution. The risk is magnified by the region's outsized concentration of production and the scarcity of alternative suppliers elsewhere.
Lasting Price Pressure Looms
The UN Conference on Trade and Development (UNCTAD) has sounded the alarm over the mounting threat to the global economy, reporting that vessel traffic through the strait has collapsed by 95% since early March.
The financial toll is already visible: European crude oil prices have surged 49% since late February, while global commodity food prices have risen 6.1% over the same period, according to a newly launched UNCTAD monitoring platform. Rising freight costs and escalating war risk insurance premiums are piling further pressure on international markets.
Analysts acknowledge a scenario for rapid recovery — should diplomacy deliver a swift resolution, markets could stabilize within weeks, mirroring the relatively contained fallout from the 2021 Suez Canal blockage. However, a prolonged standoff carries far graver consequences. UNCTAD warns that sustained elevated risk premiums, compounded by persistently high energy and transport costs, would translate into broad-based economic hardship across the globe.
The absence of any meaningful alternative to the Strait of Hormuz sharpens the threat considerably. Existing pipeline infrastructure in countries such as Saudi Arabia falls well short of the capacity needed to substitute for maritime throughput — leaving the world with few options should the crisis deepen further.
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