With only a handful of exceptions, most tankers carrying critical commodities — including oil, liquefied natural gas, refined fuels, urea, hydrogen, helium, and petrochemicals — have avoided sailing through the Strait of Hormuz since the end of February. Until recently, many of the feared shortages caused by the disruption remained largely theoretical. But analysts increasingly warn that the global economy may now be approaching a turning point.


The world will ultimately have little choice but to manage the crisis by suppressing demand for energy and industrial commodities, according to Nick Butler, the former BP vice president. In a Substack essay titled “The end of the beginning,” he argued that the current disruption goes far beyond the partial closure of the strait itself.


A subsequent analysis by Bloomberg highlighted Butler’s argument that much of the damage has come from attacks on Gulf infrastructure carried out by Iran rather than the actual closure of the waterway.


As Butler recalled, “at least eight significant Gulf refineries are fully or partially out of action. So is the Ras Laffan LNG facility in Qatar.” Ras Laffan Industrial City is one of the world’s most important liquefied natural gas export hubs, and analysts say the timeline for repairing damaged infrastructure remains highly uncertain.


So far, the global impact has been softened by countries drawing down existing stockpiles. Yet, as Bloomberg points out, those reserves are finite.


Expanding oil and gas production outside the Gulf region would also be difficult, particularly in the short and medium term. Much of the world’s remaining spare oil production capacity is concentrated in the Gulf itself.


Beyond that, Russia represents one of the few major potential alternative suppliers, though analysts note that Russian production capacity is limited and politically contentious.


Alternative export routes also face constraints. Existing pipelines from Saudi Arabia to the Red Sea and from Oman to Ras Markaz lack sufficient capacity to fully replace shipments passing through Hormuz, and expanding them would take years.


Refining capacity presents another problem. In Europe, refinery closures over recent decades have reduced the continent’s ability to process additional crude supplies quickly. Building new facilities would require major investments and long lead times.


The disruptions are also extending far beyond oil and gas markets.


Supplies of helium, methanol, naphtha, phosphates, ammonia, sulphur, and urea have all been affected. Reduced helium exports threaten microchip manufacturing, while shortages of fertilizer ingredients such as ammonia and phosphates could undermine agricultural production and global food supplies.


Shipping costs are also climbing sharply as vessels are forced onto longer and more expensive routes. Meanwhile, around 20,000 seafarers are reportedly stranded in the Gulf because of the security situation.


Despite these pressures, financial markets appear to be betting that a stable ceasefire will eventually reopen the strait and restore normal trade flows.


“This might happen,” Bloomberg noted. “But it is not hard to imagine why it might not.” The publication refers to the uncertainty that is being amplified by increasingly aggressive rhetoric from US President Donald Trump, who has signalled that economic damage remains an acceptable cost in the confrontation with Iran. 


“The only thing that matters, when I’m talking about Iran, they can’t have a nuclear weapon. I don’t think about Americans’ financial situation. I don’t think about anybody. I think about one thing — we cannot let Iran have a nuclear weapon. That’s all,” Trump recently told reporters. 


Fatih Birol, Head of the International Energy Agency, has warned that the world may be entering the biggest energy crisis in modern history. If supply disruptions continue much longer, analysts say those warnings may soon become a reality that would surprise no one.


By Nazrin Sadigova