Afrasianet - Ahmed Abu Al Tarabish - The global economy is constantly repricing geopolitical risks in the energy, food and shipping markets as tensions between the United States and Iran change, and the Strait of Hormuz acts as a critical chokehold in the global energy system, making any disruption in it have an immediate impact beyond the region to global pricing.
The U.S. Energy Information Administration reported that flows through the strait in 2024 and the first quarter of 2025 accounted for:
• More than a quarter of the world's seaborne oil trade.
• About one-fifth of the world's oil and oil products.
• Nearly one-fifth of the world's LNG trade passes through this corridor.
The International Energy Agency (IEA) has also estimated that about 20 million barrels of oil pass through the Strait of Hormuz per day.
Reuters reported on February 2, 2026, that oil fell about 5% after Trump said Iran was "seriously talking" with Washington, with Brent trading near $65.86 and West Texas around $61.79.
Analysts quoted by Reuters said the easing of tensions had removed part of the "geopolitical risk bonus" and exposed the fundamentals of a plentiful offer.
Who will be hurt first and most?
The structure of flows through the Strait of Hormuz suggests that the shock will not be evenly distributed, but will hit the parties that rely on the higher and the least with alternatives more quickly.
• Asian Energy Importers
The Energy Information Administration (EIA) said 84 percent of crude and condensate flows and 83 percent of LNG through the strait went to Asia, while China, India, Japan and South Korea accounted for 69 percent of Hormuz crude and condensate.
Any disruption would raise the cost of incoming energy, widen the current account deficit, and increase currency volatility in the world's largest industrial demand hubs.
• Europe
Europe imports based on the global price of energy, so even with its actual dependence on the Strait of Hormuz, the price of oil and liquefied gas raises the costs of its electricity, petrochemicals, and industrial transportation, restores inflationary pressures, and complicates the path of monetary policy through reference pricing channels.
• Low-income emerging economies
Import-dependent countries with limited fiscal space face two costly options:
• Expanding subsidies to put pressure on budgets
• Passing prices quickly to the consumer in order to raise food and energy inflation.
• This pattern exacerbates debt fragility and increases the risk of social instability in the event of fuel, wheat, and fertilizer shocks.
• Gulf Economies
Energy exports are not immune to the impact of these economies, as the strait transports important food imports and fertilizer exports, and the war raises the import bill, the costs of operating ports, the financing of inventories, and marine insurance premiums, putting pressure on domestic supply chains and increasing the cost of logistical security.
Who could benefit?
Markets redistribute gains circumstantially when volatility rises and risks are repriced.
• Producers outside the Gulf
Buyers are turning to barrels of oil from the Americas, the North Sea and West Africa when Middle Eastern supplies are disrupted, widening regional price differentials and boosting upstream margins, as alternative shipments are priced at a higher risk premium that reflects supply reliability and logistical distances.
• Commodity Traders and Some Shipping Sectors
Volatility raises the value of options, widens time differences, opens windows for arbitration between regions, tradehouses with flexible networks benefit from redirecting flows, and specialty freight revenues rise despite rising operational risks and premiums.
• Defence and Security Sectors
Military escalation increases demand for naval escort, air defense, surveillance, and stockpile replenishment, and emergency procurement programs and long supply cycles boost revenue streams in periods of escalation.
Detailed sectoral impacts
Any disruption in the Strait of Hormuz extends far beyond the crude markets, hitting production, transportation, and financing loops through simultaneous cost channels that reprice industrial, agricultural, and service sectors.
• Energy Markets
The fundamentals look relatively comfortable: the IEA has predicted that global supply will increase by about 2.5 million barrels per day in 2026 after 3 million barrels per day in 2025 with stockpiles piling up.
But markets are pricing access rather than just barrels, as geopolitical tensions raise premiums, slow shipping, and spur precautionary buying, tightening the "effective supply" even if production remains high.
• Shipping & Insurance
Insurance premiums and freight rates raise the cost of trade as a hidden tax. Reuters reports that war risk premiums on Gulf shipments have risen during previous tensions, and the Financial Times, quoting Marsh McLennan, noted that shipbody insurance has risen from 0.125% to 0.2% of the ship's value. A sustained war could bring back or exceed these jumps.
• Petrochemicals
More than 15% of the world's chemical products pass through the strait, and any disruption raises the cost of hydrocarbon feedstock and shipping, and transfers pressures to plastics, synthetic fibers, packaging materials, and automotive inputs, increasing production costs and putting pressure on industrial profitability.
• Fertilizers
Fertilizers are linked to natural gas and shipping. The World Bank says the fertilizer price index rose 20% in 2025 with urea expected to rise 30% amid tight gas markets, warning of the risk of disruption.
The disruption affects 16.5% of regional fertilizer exports, pushing up import costs and constraining supply.
Food
Food inflation is transmitted through fuel, shipping and fertilizers, and the Food and Agriculture Organization (FAO) is tracking this through the World Food Price Index, explaining the spread of shocks through cereals, oils, sugar and dairy.
With 14.5% of regional food imports passing through Hormuz, the Gulf import bill is rising.
Abundance vs. Risk Bonus
The glut of supply appears to be on paper, but the risk of a choke point may quickly be overcome, as periods of calm in tension have refocused the market on expectations of supply outstripping demand, and any escalation re-inserts a geopolitical premium estimated by Citi's analysis at around $7-10 per barrel during periods of tension, according to Reuters.
Broader macro effects
Energy and shipping shocks are shifting pressures across price, finance, and foreign trade channels, reshaping the trajectories of inflation, growth, and monetary stability in importing countries.
• Rising consumer inflation
Rising fuel and transportation costs are shifting pressure to the prices of goods and services, raising the overall price index, and putting pressure on purchasing power.
• Tightening monetary policy
Price pressures are pushing central banks to keep interest rates high or higher, raising the cost of financing and restricting credit.
• Slowing economic growth
The high cost of borrowing and the erosion of real income lead to a decline in consumption and investment, weakening activity.
• Exchange rate fluctuations
Energy import bills are widening, putting pressure on the current account and increasing currency volatility.
• Higher humanitarian and food risks
Jumps in food and fertilizer prices are raising the burden of living in low-income countries and doubling their fragility.
Financial Markets
Energy shocks are rapidly redistributing portfolios, with sharp jumps in oil pushing flows towards gold and government bonds as relative havens, while transport stocks and energy-intensive industries are under selling pressure as a result of rising costs and declining margins.
Markets are also raising stock volatility and repricing interest rate expectations in response to the inflation trajectory.
Market behavior under escalation
Analysts spoke of the speed at which sentiment in energy markets is shifting, with UBS' Giovanni Staunovo linking the drop in prices to easing tensions, while PVM's Tamas Varga described what happened as "the disappearance of the geopolitical risk premium."
It is expected that the mechanisms will reverse in the same direction as quickly if a conflict breaks out, with the reintroduction of the premium and higher contract volatility.
Shock Transmission Series
If conflict breaks out, markets quickly reprice risks across energy, logistics, and finance channels:
• Adding a risk premium to oil and liquefied gas
Markets reintroduce risk into spot and futures contracts, and prices and volatility rise.
• Raising marine insurance premiums and freight rates
The cost of transportation increases as a result of war risk insurance and tanker wages, thereby increasing the burden of trade.
• Increasing fertilizer production costs
The price of energy and the cost of shipping are rising, the cost of nitrogen and urea production is increasing, and the rise is being transferred to food prices.
• Rising food import prices
The cost of transportation, energy, and agricultural inputs is passed over to the prices of grains and commodities.
• Tightening of financial conditions globally
Inflationary pressures are pushing central banks to tighten policy, raising the cost of financing and reducing liquidity.
The Strait of Hormuz is thus transforming from a geographical crossing into a pricing mechanism that simultaneously affects energy markets, agriculture, and global inflation trajectories.
