How US-Iran Conflict is Reshaping Global Supply Chains

The escalation of military conflict between the United States, Israel and Iran has triggered an immediate crisis across global supply chains, with the effective closure of the Strait of Hormuz creating unprecedented disruptions to maritime trade, air cargo and critical industries worldwide.

The Islamic Revolutionary Guard Corps has issued radio warnings prohibiting vessel passage through the strait, reportedly trapping nearly 170 container ships and halting movement of 20% of the world's seaborne oil supply.

"The speed and scope of escalation in the Middle East will have taken many businesses by surprise and has highlighted just how unstable the region can become in as little as 48 hours," says Simon Geale, EVP at Proxima.

"What will concern companies is that we may just be at the start of a prolonged conflict and there may be much more to come in terms of the impact on global supply chains."

Maritime traffic paralysis

Analysis by Pole Star Global of 3,878 vessel zone events in the Persian Gulf during the seven-day period surrounding the February 28 military strikes has revealed dramatic shifts in maritime activity.

Traffic surged 162% on the day of operations, with the peak occurring at 05:00 UTC when 138 vessel zone events were recorded, representing a seven-fold increase over baseline hourly traffic. Iranian-flagged vessels showed a marked reduction in activity, declining from 940 events in the pre-strike period to just 41 events in the six hours following military operations, a 95.6% decrease.

The International Maritime Organization's Secretary-General, Arsenio Dominguez, issued a statement: "No attack on innocent seafarers or civilian shipping is ever justified. These crews are simply doing their jobs and must be protected from the effects of wider geopolitical tensions."

The IMO is urging shipping companies to exercise maximum caution and avoid transiting the affected region where possible until conditions improve.

Major shipping lines have also responded swiftly to the crisis.

Maersk announced suspension of all vessel crossings through the Strait of Hormuz, with services calling ports in the Arabian Gulf experiencing delays, rerouting or schedule adjustments. The company stated it is rerouting its ME11 and MECL services around the Cape of Good Hope.

Hapag-Lloyd cited the official closure of the Strait by relevant authorities in suspending all transits, noting: "This measure is therefore not discretionary but a necessary response to the current conditions and regulatory restrictions."

MSC has instructed all vessels currently operating in the Gulf region to proceed to designated safe shelter areas, stating that the safety of its crews remains its highest priority. The diversions around the Cape of Good Hope add approximately 3,500 nautical miles and roughly US$1m in fuel costs per voyage, expenses expected to be passed to consumers.

Operations at Jebel Ali Port, the Middle East's largest container hub, were also temporarily suspended after debris from an aerial interception caused a fire within the port area. Port operator DP World described the halt as a precautionary measure.

While Dubai Civil Defence brought the fire under control and operations resumed after safety assessments, the incident exposes the growing spillover of regional conflict into critical commercial infrastructure. Linerlytica estimates approximately 450,000 TEU of containers remain stuck inside the Gulf.

The impacts on air cargo 

The conflict has severely impacted air freight capacity, with data from Netherlands-based consultancy Rotate showing global air cargo capacity down 18% from the previous week.

• Emirates SkyCargo, the fourth-largest cargo airline by traffic, suspended flights until 15:00 UAE time on March 2, while also placing temporary restrictions on booking and acceptance of all new shipments for 24 hours. The carrier operates nearly a dozen Boeing 777 freighters and leases several crewed Boeing 747-400s from third-party carriers.
• FedEx has suspended flights to and from Bahrain, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Qatar, United Arab Emirates and Saudi Arabia, with pickup and delivery services in several of these markets temporarily halted. The company stated: "The safety and well-being of our team members is our highest priority."
• Qatar Airways, which operates 29 Boeing 777 freighter aircraft offering more than 3,000 tonnes of capacity per day, has temporarily halted flights due to Qatar's airspace closure.
• Cathay Group suspended all Middle East operations, including passenger services to Dubai and Riyadh and freight services to Al Maktoum International Airport.
• Etihad Airlines, operating five Boeing 777 freighters, suspended all flights through Abu Dhabi until Monday at 2am, while Oman Air implemented temporary restrictions on perishable cargo carriage.

Energy sector under attack

Saudi Aramco shut its Ras Tanura refinery after Iranian drone attacks on 2 March, marking a definitive escalation on the third day of strikes.

The state oil giant halted operations at the facility, located on Saudi Arabia's Gulf coast and one of the Middle East's largest refineries with a capacity of 550,000 barrels per day. The complex also serves as a critical export terminal for Saudi crude.

Sam Coyne, CEO Europe at Currenxie, comments: “Rising oil prices might grab the headlines but escalation across the Middle East will result in price hikes across all industry supply chains. The crippling of key trade routes will prolong uncertainty and continue to drive up supply costs, squeezing merchant margins ever further and ultimately leading to a spike in the cost of consumer goods and surging inflation.

“Recent research from the Chartered Institute of Procurement and Supply (CIPS) recently warned that due to rising costs of transport, energy and raw materials, consumer goods prices could soar during 2026. The events over the weekend are likely to make such forecasts inevitable and global businesses and consumers will rightly be hugely concerned of the longer-term impact on supply chain costs and the price of products on the shelves."

Rafael Grossi, Director General of the IAEA, warned at the opening of the quarterly board meeting on March 2 that mass evacuation of cities across the Middle East may become necessary if civil nuclear power stations are attacked.

"We cannot rule out a possible radiological release with serious consequences, including the necessity to evacuate areas as large or larger than major cities," he said. "We therefore urge utmost restraint in all military operations."

Other industries brace for fall-out

Healthcare: The sector faces a critical supply cliff for generics and Active Pharmaceutical Ingredients from India.

Air freight costs have spiked 400% in 48 hours, affecting the vast majority of Indian pharma exports which transit through affected waters. Major manufacturers are also warning of inventory shortages as emergency air detours face severe capacity constraints.

Technology: Just-in-time delivery for microchips and consumer tech is severely disrupted.

EV batteries and semiconductors for 2026 production are stranded in the Gulf. Regional data infrastructure could also be impacted – Microsoft Azure and AWS are "investigating" reported latency spikes at Middle Eastern nodes following missile strikes on Dubai and Doha hubs.

Agriculture: The Strait of Hormuz blockage threatens nitrogen fertiliser exports ahead of Northern Hemisphere spring planting. Prolonged disruption could trigger shortages in South Asia and Latin America, causing crop yield drops for late 2026 and food price spikes.

Energy: Qatar's halted LNG and food tanker departures are critical – internal storage will max out within weeks, forcing production shutdowns. The Middle East, importing 85% of its food, faces mounting security concerns as air bridges prioritise military/medical over perishable cargo.

Construction: The Jebel Ali Port fire disrupted the world's largest man-made harbor, stalling delivery of Chinese structural steel for NEOM's The Line and Riyadh skyscrapers. Specialised materials like heat-reflective glass cannot be airlifted, freezing construction phases. Multiple companies are invoking force majeure clauses with potential multi-month stop-work orders.

Recent briefings delivered by DP World COO Tiemen Meester have emphasised: "The Middle East is a vital trade route... our focus is on providing superior infrastructure and security to ensure the global supply chain can thrive even in a volatile environment."

The road ahead

Maritime authorities have issued critical advisories, with the US Maritime Administration advising vessels to maintain a minimum 30 nautical mile standoff from US military vessels operating in the region due to ongoing military operations and potential retaliatory action. UK Maritime Trade Operations has called for heightened vigilance and enhanced watch protocols for all transiting vessels.

Simon emphasised the uncertainty ahead: "Just what does happen next now depends on the intentions and actions of several actors and the composition of the next Iranian regime. But for businesses, there is a need to enact contingency plans immediately and begin working through the implications of this conflict lasting weeks or months, rather than days."

As businesses worldwide assess the implications of sustained conflict, the immediate priority remains implementing contingency plans and preparing for potential weeks or months of disruption to global trade routes that serve as arteries for the international economy.