The Implications of the Strait of Hormuz for International Trade

The Strait of Hormuz is a vital "chokepoint" in the global economy, facilitating the transport of approximately one-fifth of global oil and (LNG) supplies, as well as over 33% of seaborne fertilizer trade. Amidst the closures which reduced transit traffic by nearly 97%. This study presents a descriptive analysis, based on prior research and reports of the economic consequences resulting from the closure of this waterway. Findings indicate a slowdown in global trade in goods from approximately 4.7% in 2025 to a range of 1.5% to 2.5% in 2026. This slowdown in the movement of goods drives macroeconomic disruptions stemming from delays, inventory depletion, and declining aggregate demand. Consequences include mandatory energy consumption restrictions in heavy manufacturing sectors and rising oil prices. Regarding global supply chains, raw material shortages triggered an acute supply crisis in the agricultural sector and drove up agricultural operating costs; 33% of global fertilizer supplies were disrupted, and global exports fell by 9%. Furthermore, additional financial costs amounting to millions of dollars per voyage drove up shipping prices borne by consumers; specifically, war risk insurance premiums rose from 0.125% to 0.4% per transit. The study recommends enhancing maritime security and diversifying energy and trade routes. For governments and companies, the issue is no longer merely about when conditions in the Strait of Hormuz will return to normal; rather, the crisis is fundamentally reshaping how states and businesses approach energy security, maritime shipping, and global supply chains issues that remain central to international trade. The post-conflict phase is likely to be characterized by the imposition of partial restrictions and a reliance on negotiated arrangements regarding transit operations. The Strait crisis demonstrates that maritime chokepoints pose risks to the global economy; global trade remains highly vulnerable to geopolitical shocks unless structural reliance on these vital corridors is systematically reduced.