Joint strikes launched by the United States and Israel on Iran over the weekend are expected to create new supply chain and logistics challenges, according to industry observers.
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The military action, aimed at halting Iran’s development of nuclear weapons, could lead to higher energy prices, restricted shipping routes in the Middle East, and additional pressure on global freight networks.
Bruce Chan, Managing Director at investment firm Stifel, said in a research note that one of the biggest impacts has been the apparent closing of the Strait of Hormuz. Chan wrote that the conflict has caused a “shuttering of the Strait of Hormuz, and a prolonged effect of reduced Suez Canal and Red Sea shipping traffic.”
Those developments come at a time when shipping traffic in the Red Sea had only recently begun showing signs of returning to normal after attacks by Yemen’s Houthi militants disrupted the corridor beginning in late 2023. Before those attacks, the Red Sea and Suez Canal route carried roughly 10% to 15% of global maritime trade.
Chan said the conflict could curtail global fleet capacity and keep ocean container rates elevated for longer. Following the strikes, container shipping lines suspended transit through the Strait of Hormuz, affecting vessels that represent roughly 2% of the global ocean container fleet.
“Increased uncertainty from geopolitical conflict presents a broad risk to demand, especially if fuel prices increase substantially enough to affect consumer discretionary expenditures,” Chan wrote.
Energy markets are also closely watching developments in the region.
Daniel Moore, an analyst at Baird & Co., said the potential closing of the Strait of Hormuz is particularly significant because a large portion of the world’s oil supply moves through the waterway.
He noted that roughly 20% of global petroleum liquids consumption and about one-third of globally traded seaborne crude oil moves through the strait, representing about 17 million to 20 million barrels per day. Around 90% of Saudi Arabia’s oil exports also pass through the corridor.
“The most immediate consequence of these developments is higher energy prices,” Moore wrote. “However, the impact is unlikely to stop there. Disruption to maritime corridors will likely push container rates incrementally higher in some lanes as transit times lengthen and insurance premiums rise. At the same time, shippers seeking to mitigate delay risk may shift incremental volume to air cargo, increasing demand for lift capacity, which is likely to place upward pressure on airfreight rates across much of the region. We expect the direct economic impact on U.S. and European markets to be more limited.”
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