Strait of Hormuz Shipping Slowdown Impacts Energy, Food, and Tech
Shipping through the Strait of Hormuz has slowed to a crawl since the U.S.-Israeli war on Iran began on February 28. This has impacted energy markets, with global oil prices now around $100 a barrel and U.S. gasoline prices surging close to $4 a gallon.
Read also: UN Flags Growing Economic Fallout from Hormuz Shipping Crisis
Fertilizer and Food Supply Pressures
The strait is a critical route for agricultural commodities. About a third of globally traded fertilizer passes through the strait. For urea, the workhorse fertilizer for wheat and corn crops, the strait carries roughly two-thirds of global seaborne supply. At the urea import hub in New Orleans, prices jumped 32% in a single week this month.
This surge coincides with the spring planting season across the country. Fertilizer decisions made in the next few weeks determine fall harvests. When input costs spike, farmers apply less. That shows up months later in crop yields, and then in the price of bread, corn, livestock feed, meat and dairy. The American Farm Bureau has written an open letter to President Trump warning of a production shock that could drive broad inflation across the food supply. The effects won’t hit grocery shelves until later this year.
Helium Supply Disruption Affects Chip Production
Another consequence involves helium, with Qatar supplying about a third of the world’s helium supply. Helium is essential to the semiconductor manufacturing process and difficult to substitute. The semiconductor industry accounts for roughly a quarter of global helium demand. After missile strikes hit Qatar’s Ras Laffan complex earlier this month and multiple helium plants went offline, roughly a third of global supply disappeared from the market. Qatar says it will take years to fix all the damage.
Spot helium prices have surged between 40% and 100% since the war began. The industry is absorbing it. South Korean chip manufacturers have stockpiled enough helium to last around six months and large manufacturers are insulated by long-term contracts.
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