Iran Conflict Disrupts Energy Supplies
The ongoing Iran conflict continues to disrupt energy supplies and global trade flows, with the Strait of Hormuz shut and multiple oil tankers attacked. This is driving up shipping costs and market volatility. Elevated transportation and input costs may further strengthen the case for infill logistics and last-mile assets.
The closure of the Strait of Hormuz has caused a dramatic drop in tanker traffic, with transits down approximately 92% since the conflict began on February 28, 2026. As of March 2, nearly 1,000 tankers were stranded in the Middle East region, representing about 22% of the global fleet. Major shipping companies like Maersk and Hapag-Lloyd have suspended transits, and vessels are anchoring in regional ports to avoid the conflict. The disruption has sent shockwaves through global energy markets, with Brent crude oil prices surpassing $100 per barrel and reaching a peak of $126. Roughly 20% of the world's oil and natural gas normally passes through the Strait, and the closure has been described as the largest disruption to energy supply since the 1970s energy crisis. Some analysts are warning that prices could reach $200 a barrel if the disruptions persist. Alternative routes, such as Saudi Arabia's East-West pipeline to the Red Sea port of Yanbu and the UAE's Abu Dhabi Crude Oil Pipeline to Fujairah, have limited capacity to replace the volumes lost due to the Strait's closure. Even if the Strait were to reopen immediately, experts say it could take months to resolve the supply chain issues, with ships in the wrong locations and insurance policies cancelled. War risk insurance premiums have skyrocketed, in some cases quadrupling, making transit through the Strait prohibitively expensive even for companies willing to take the risk. This has led to increased shipping costs and longer delivery delays, with some firms opting to reroute vessels around the Cape of Good Hope, adding 10-15 days and $1-2 million per voyage. The situation is further complicated by GPS jamming and ships intentionally turning off their AIS, increasing the risk of collisions. The crisis is not limited to oil, with disruptions affecting supplies of fertilizers, critical minerals, and other goods. Europe, which relies on the Strait for a significant portion of its LNG imports, faces increased energy costs at a time when it is already dealing with the impact of the Russia-Ukraine war. The conflict highlights the vulnerability of critical shipping lanes and the potential for a single country to exert geopolitical pressure through control of these chokepoints.
