The ongoing disruptions in the Strait of Hormuz continue to pose significant risks to global trade, energy markets and supply chain stability as of mid-March. While initial shocks earlier this month triggered immediate volatility, the situation is now evolving into a broader structural concern for trade-dependent economies and policymakers.
A critical artery of global commerce, the Strait handles roughly 25% of global seaborne oil trade, alongside substantial flows of liquefied natural gas (LNG), liquefied petroleum gas (LPG), fertilizers and petrochemicals. According to estimates from the United Nations Conference on Trade and Development (UNCTAD), around 38% of crude oil shipments, 29% of LPG, and nearly one-fifth of LNG and refined oil products transit through this corridor. Chemicals and fertilizers—key inputs for agriculture and industry—also rely heavily on uninterrupted passage.
As of 20 March, maritime activity has shown signs of partial adjustment, but flows remain below normal levels due to rerouting, congestion at alternative hubs and persistent security concerns. Earlier in March, daily vessel transits dropped sharply from an average of around 120–130 ships to significantly lower levels, highlighting the vulnerability of global shipping to geopolitical disruptions. While some movement has resumed, the backlog and delays continue to affect delivery timelines and trade costs.
Energy markets reacted sharply to the initial disruption and remain volatile. Brent crude surged above $90 per barrel during the peak of the crisis, while natural gas prices recorded steep increases. Although prices have shown some stabilization in recent days, they remain elevated compared to pre-disruption levels, continuing to exert pressure on global trade through higher freight, fuel and insurance costs.
The trade implications extend far beyond energy. Rising oil prices are historically linked to increases in food prices due to higher transportation and production costs. Similarly, natural gas price fluctuations directly affect fertilizer markets, particularly urea and ammonia, which are essential for agricultural output. As a result, the current disruption risks feeding into broader inflationary pressures, especially in food-importing nations.
Developing economies remain the most exposed. Many countries in Asia and Africa depend heavily on imports of fuel, fertilizers and food commodities, and have limited fiscal capacity to absorb sustained price shocks. For these economies, the issue is not only rising costs but also the risk of supply delays, which can disrupt domestic production cycles and economic stability.
From a trade systems perspective, the disruption underscores the fragility of global supply chains concentrated around key maritime chokepoints. Events in the Strait of Hormuz demonstrate how localized geopolitical tensions can transmit rapid and wide-ranging impacts across global markets. Similar patterns were observed during the COVID-19 pandemic and the Russia-Ukraine War, where supply chain disruptions quickly translated into global economic stress.
The current situation reinforces the importance of policy responses focused on resilience. Safeguarding freedom of navigation under international law, diversifying supply routes, strengthening strategic reserves, and enhancing regional trade cooperation are emerging as key priorities. Ensuring the security of maritime transport infrastructure and minimizing disruptions to civilian trade routes will be critical to preventing further escalation of trade risks.
As of now, the trajectory of the disruption remains uncertain. However, even if physical flows normalize, the episode has already exposed deep structural vulnerabilities in global trade systems. For policymakers and businesses, the focus is shifting from short-term crisis management to long-term resilience planning in an increasingly volatile geopolitical environment.