Hormuz crisis jolts global supply chains

Crescent Petroleum Chief Executive Officer Majid Jafar has warned that the Gulf conflict has moved beyond an energy-market disruption into a whole-economy shock, exposing the vulnerability of global trade, industry and food systems to a narrow set of strategic maritime chokepoints.

Speaking in Washington, DC, at the Arab Gulf States Institute’s Petro Diplomacy 2026 conference, Jafar said disruption to flows through the Strait of Hormuz had shown how far the global economy remains dependent on an energy corridor that normally handles about a fifth of the world’s oil and a large share of liquefied natural gas exports. His remarks placed the crisis at the centre of a wider debate over energy security, supply-chain resilience and the cost of overreliance on efficiency-driven trade networks.

“Energy is security,” Jafar told an audience of business, finance and government leaders, arguing that the Gulf crisis had affected not only oil and gas prices but also food, shipping, fertilisers, metals, insurance and manufacturing. The message underscored a shift in corporate and policy thinking, with governments and companies reassessing the risks attached to concentrated production hubs and maritime routes.

The Strait of Hormuz, linking the Gulf with the Gulf of Oman and the Arabian Sea, is the main export route for crude, condensates, refined products and LNG from several Gulf producers. The waterway is also critical for shipments of urea, ammonia, sulphur, aluminium and other industrial commodities. A sustained disruption therefore transmits pressure well beyond petrol pumps, affecting farmers, airlines, petrochemical producers, power utilities and manufacturers.

Energy markets have already reflected the strain. Brent crude has traded sharply above pre-conflict levels, while diesel, jet fuel and gas benchmarks have faced additional pressure as buyers compete for replacement cargoes. Refiners outside the region have struggled to compensate for lost Middle Eastern volumes, especially in middle distillates where spare flexibility is limited. LNG markets have been particularly exposed because large volumes from Qatar and the UAE normally move through Hormuz, with few practical alternatives for those cargoes.

Jafar said the crisis had revived an older lesson that was partly neglected during decades of globalisation: the cheapest supply chain is not always the most secure. He called for a move from “just-in-time” to “just-in-case” planning, including strategic storage, diversified transport routes, stronger infrastructure protection and investment in spare capacity across energy and industrial systems.

The warning comes as governments across Asia and Europe weigh emergency stock releases, demand-management measures and support for consumers facing higher fuel and power bills. Asian economies are among the most exposed because a large share of Gulf crude and LNG is shipped eastwards. Europe, though less dependent on Gulf oil, faces knock-on effects through gas, refining margins, fertilisers and shipping costs.

The conflict has also sharpened attention on food security. Gas is a key input for fertiliser production, while Gulf exporters account for substantial volumes of internationally traded urea and ammonia. Higher fertiliser prices can feed into farm costs and food inflation, especially in import-dependent economies already facing pressure from debt servicing and currency weakness.

Shipping has become another channel of stress. War-risk premiums, rerouting costs, vessel delays and reduced transparency in tanker movements have complicated price discovery and contract delivery. Some ships have limited tracking signals in high-risk waters, making it harder for traders, insurers and refiners to judge available supply. The result has been a more volatile market in which physical cargoes carry a premium over paper expectations.

For Gulf energy producers, the crisis has strengthened the case for export redundancy. Saudi Arabia and the UAE have pipeline links that can bypass Hormuz for part of their crude exports, but capacity is limited and not available to all regional producers. Qatar, Kuwait, Iraq, Bahrain and Iran remain heavily dependent on the strait for most external energy shipments. LNG is even harder to reroute because liquefaction terminals and receiving infrastructure are fixed assets.

Crescent Petroleum, based in Sharjah, has long argued for a pragmatic energy transition in which gas remains central to reliability while investment expands in lower-carbon technologies. Jafar’s Washington address reflected that position, presenting resilience as a prerequisite for both economic stability and climate policy. He argued that secure energy systems would be needed to sustain public support for the transition, particularly when geopolitical shocks raise living costs.