While the closure of the Strait of Hormuz has immediately driven up oil and gasoline prices, the long-term effects on public health and nutrition may not be fully...
The Strait of Hormuz serves as a critical waterway linking the Persian Gulf to global markets, with approximately 20% of the world's oil and liquefied natural gas flowing...
According to Tibor Besedes, a professor in the School of Economics at Georgia Tech, the effects of such disruptions move slowly and manifest in areas where people do...
While the closure of the Strait of Hormuz has immediately driven up oil and gasoline prices, the long-term effects on public health and nutrition may not be fully realized for several months. Because energy costs underpin the production, logistics, and transportation of essential goods, the disruption is expected to ripple through supply chains affecting pharmaceuticals and food security.
The Strait of Hormuz serves as a critical waterway linking the Persian Gulf to global markets, with approximately 20% of the world’s oil and liquefied natural gas flowing through the passage. When this flow is constrained, the economic impact extends into industries not typically associated with energy crises, including healthcare, and agriculture.
According to Tibor Besedes, a professor in the School of Economics at Georgia Tech, the effects of such disruptions move slowly and manifest in areas where people do not typically connect a link to energy.
Oil and natural gas are part of the cost structure for an enormous range of goods.
Tibor Besedes
Impacts on Pharmaceuticals and Medical Supplies
The pharmaceutical industry is facing immediate and delayed pressures. In Asia, diesel prices are rising and jet fuel availability is tightening. China has ordered its refineries to halt fuel exports, which has created shortages that are increasing shipping costs for United States imports, including pharmaceuticals.
Hormuz Closure Could Trigger Long Persian Gulf
Beyond shipping, the strait is a primary corridor for naphtha, a feedstock used to produce pharmaceutical components, solvents, textiles, and packaging. Roughly 85% of polyethylene exports from the Middle East move through the waterway.
Besedes notes that while consumers may not see these effects immediately, the cost of all products utilizing naphtha will rise the longer the strait remains closed.
Threats to Global Food Security
The disruption of natural gas flows poses a significant risk to the global food supply chain due to the production of fertilizer. Natural gas is an essential component in the manufacturing of fertilizers, and states in the Persian Gulf account for half of global sulfur exports and one-third of global urea exports.
Hormuz Closure Could Trigger Long Strait of
Urea prices at the New Orleans import hub have already seen sharp increases. However, the impact on food availability and pricing is delayed by the agricultural cycle.
Besedes explains that these effects will likely be seen in six to 12 months, depending on the specific crop and its cycle. He warns that decreased fertilizer availability or usage will lead to lower crop yields, which in turn will result in higher food prices.
Systemic Vulnerabilities in the Supply Chain
Experts highlight that the Strait of Hormuz represents a unique vulnerability because there is no scalable way to reroute the volume of goods that normally transit the area. Pipeline alternatives can only replace a small fraction of the 20 million barrels per day that typically move through the strait.
Strait of Hormuz closure sparks concern over possible global oil shock • FRANCE 24 English
Chris Gaffney, a professor of the practice in the H. Milton Stewart School of Industrial and Systems Engineering at Georgia Tech, states that unlike canal blockages or port strikes, there is no meaningful way to reroute volume.
If This proves disrupted, flow is constrained rather than redirected.
Systemic Vulnerabilities in the Supply Chain
Chris Gaffney
This lack of flexibility is compounded by a global supply chain that has been optimized for efficiency rather than resilience. Mathieu Dahan, an associate professor in the Stewart School, notes that the high investment costs required to build flexibility have left systems vulnerable to chokepoint disruptions.
Further complicating the recovery is the impact on shipping logistics. Alan Erera, senior associate chair in the Stewart School, explains that rerouting ships onto longer paths increases fuel and labor costs and ties up containers for longer periods. This increases inventory costs for shippers as capital remains locked up while goods are in transit.
Even if the strait reopens, the system is unlikely to return to its previous state quickly. Slow restart timelines and sustained higher costs mean the disruption will continue to shape prices across the economy long after the initial event has left the headlines.
