The Strait of Hormuz, the world's most critical maritime chokepoint for energy trade, has been effectively shut down since late February 2026 following the escalation of military conflict between the United States, Israel, and Iran. With tanker traffic down by as much as 90%, oil prices surging past $100 per barrel, and Qatar declaring force majeure on liquefied natural gas contracts, the disruption is sending shockwaves through global procurement and supply chains. A new UNCTAD rapid analysis published on March 11 warns that developing economies face the greatest exposure, with energy, fertilizer, and freight cost increases threatening to cascade into every procurement category.
The Crisis: What Happened
On February 28, 2026, the United States and Israel launched Operation Epic Fury, a joint military campaign targeting Iranian missile systems, air defenses, military infrastructure, and leadership. Nearly 900 strikes were carried out in the first 12 hours. Iran responded with retaliatory missile and drone attacks across the region, and the Islamic Revolutionary Guard Corps (IRGC) issued warnings effectively prohibiting vessel passage through the Strait of Hormuz.
The consequences were immediate and severe. By early March, tanker traffic through the Strait had dropped by approximately 70%, and by March 9, shipping analytics firm Kpler reported that traffic had fallen by as much as 90%. More than 150 ships anchored outside the Strait to avoid transit risks. Major container shipping companies, including Maersk, CMA CGM, and Hapag-Lloyd, suspended transits through the Strait and related routes.
On March 2, QatarEnergy halted LNG production at its Ras Laffan and Mesaieed facilities after Iranian attacks targeted regional energy infrastructure. By March 4, Qatar declared force majeure on its gas contracts. On March 11, Shell followed with its own force majeure declaration on LNG contracts sourced from Qatar.
Why the Strait of Hormuz Matters for Global Trade
The Strait of Hormuz is not just another shipping lane. It is the single most important bottleneck in global energy trade:
- 20 million barrels of oil per day flow through the Strait, representing roughly 25% of global seaborne oil trade and one-fifth of worldwide oil consumption
- Approximately 20% of global LNG exports transit the route, with Qatar alone supplying 20% of the world's LNG
- Around one-third of global seaborne fertilizer trade (approximately 16 million tonnes annually) passes through the corridor
- The Strait measures just 33 kilometers at its narrowest point, with actual tanker corridors only a few kilometers wide in each direction
The primary energy producers dependent on this waterway include Saudi Arabia, Iraq, Kuwait, the UAE, Qatar, Bahrain, and Iran. Energy shipments primarily reach markets in China, India, Japan, and South Korea, but the price effects ripple across every economy on the planet.
Because most regional crude lacks alternative export routes, blocked shipping has forced producers to reduce output. Storage capacity constraints have already triggered production cuts in Iraq and other Gulf nations. The only bypass options — Saudi Arabia's East-West Pipeline (Petroline) and the UAE's Abu Dhabi Crude Oil Pipeline — handle only a fraction of normal Strait volume.
Energy Market Shock
The market response has been dramatic. Brent crude, which traded in the mid-$60 range before the military operations began, temporarily soared above $100 per barrel for the first time since 2022 and briefly approached $120. Analysts project prices could remain above $100 if the conflict extends.
The LNG market has been equally volatile. Following QatarEnergy's force majeure declaration, benchmark Dutch and British wholesale gas prices surged nearly 50%, while benchmark Asian LNG prices jumped almost 39%. The estimated loss of LNG output for 2026 could range from 3.3 million tonnes in a 15-day halt scenario to approximately 11.2 million tonnes in a full-scale interruption lasting four to five weeks.
S&P Global analysts warned that a week-long disruption of the Strait would be "historic," and anything extending beyond that would be "epochal."
UNCTAD Report: Developing Economies at Greatest Risk
On March 11, 2026, UN Trade and Development (UNCTAD) published a rapid analysis titled Strait of Hormuz Disruptions: Implications for Global Trade and Development. The report's key findings paint a stark picture for procurement professionals working in developing markets:
- Fertilizer access is under threat: With one-third of global seaborne fertilizer trade disrupted, the poorest countries face worsening access to agricultural inputs. This echoes the 2022 crisis when the Ukraine conflict sent fertilizer prices spiraling, directly impacting food security in Africa and South Asia.
- Shipping costs are compounding: Freight rates for oil tankers are surging, war risk insurance premiums are climbing, and rising marine fuel costs are elevating shipping expenses across all supply chains — not just energy.
- Developing economies are most exposed: High debt burdens and rising borrowing costs limit the ability of lower-income countries to absorb new price shocks. Countries that depend on energy and fertilizer imports are facing a double squeeze on public budgets.
- Historical precedent is alarming: The report references how COVID-19 and the Ukraine conflict "showed how disruptions to energy, transport and agricultural inputs can quickly spread" across interconnected markets. This crisis combines elements of both.
Procurement Implications: What Is Changing
The Strait of Hormuz crisis is not just an energy story. It is reshaping procurement economics across virtually every sector.
Construction and Infrastructure
Oil price increases directly inflate construction costs through multiple channels. Bitumen, plastics, insulation, and sealants are all petrochemical derivatives. Heavy civil works that require large volumes of aggregate, concrete, and asphalt are disproportionately affected by diesel price increases for haulage.
Industry analysis forecasts that the current oil price environment could increase infrastructure project costs by up to 12%. As a rule of thumb, a $5 change in Brent crude can swing infrastructure costs by 2-4%. For infrastructure and construction tenders funded by multilateral development banks, this means budget overruns, procurement delays, and potential project restructuring.
The Philippines Department of Public Works and Highways has already warned that rising oil prices threaten to increase infrastructure project costs. Similar warnings are emerging from procurement authorities across Asia-Pacific and Africa.
Energy Sector
The energy sector faces both disruption and opportunity. Countries dependent on Gulf oil and gas imports must urgently diversify supply sources, creating demand for alternative energy procurement. Qatar's force majeure on LNG is particularly devastating for India, which sources 40-46% of its LNG imports from Qatar, and for Bangladesh and Pakistan, which are likely to resort to demand curtailment or switching to thermal coal.
Meanwhile, the crisis accelerates the case for renewable energy investment. The EU's recently adopted Clean Energy Investment Strategy requiring EUR 660 billion per year in energy investment takes on new urgency. Countries that previously hesitated on renewables now face a compelling economic argument for energy independence.
Agriculture and Food Security
The fertilizer supply disruption could trigger a food security crisis in import-dependent developing countries. With 16 million tonnes of annual seaborne fertilizer trade passing through the Strait, procurement agencies in Sub-Saharan Africa, South Asia, and Southeast Asia face shortages and price spikes for nitrogen-based fertilizers (urea), phosphates, and sulfur. Nearly 50% of global urea and sulfur exports and 20% of global LNG (a key feedstock for nitrogen fertilizers) transit the Hormuz corridor.
This creates procurement urgency for agricultural supplies, including alternative fertilizer sourcing, food aid logistics, and emergency agricultural input programs.
Transport and Logistics
Freight rate increases are cascading through every supply chain. Even goods that do not originate from the Gulf are affected, as shipping companies reprice global routes to account for higher fuel costs and war risk premiums. Transport and logistics tenders will see higher bids, longer delivery timelines, and increased demand for supply chain resilience consulting.
Countries and Regions Most Affected
Gulf States and the Middle East
The producing countries — Saudi Arabia, Iraq, Kuwait, UAE, Qatar, Bahrain — face revenue losses from production cuts and export disruptions. However, they also face reconstruction and emergency procurement needs. Browse Middle East tenders for Qatar, UAE tenders, and Saudi Arabia tenders for emerging opportunities in infrastructure repair, energy diversification, and emergency logistics.
South Asia
India, Bangladesh, and Pakistan are among the most exposed economies due to heavy reliance on Gulf energy imports. India's dependence on Qatari LNG (over 40% of imports) means emergency procurement for alternative energy sources and LNG spot market purchases. Browse India tenders and Pakistan tenders.
East Asia
China, Japan, and South Korea are major destination markets for Gulf crude and LNG. Japan and South Korea, with minimal domestic energy production, face the most acute supply security challenges. Strategic petroleum reserve drawdowns and emergency procurement of alternative supplies are likely.
Sub-Saharan Africa
African nations that depend on fertilizer imports and food aid face a double crisis: higher input costs for agriculture and higher fuel costs for every other sector. The AfDB and World Bank may need to mobilize emergency financing for food security and energy access programs, creating new consulting and supplies procurement.
What This Means for Contractors and Suppliers
The Strait of Hormuz crisis demands immediate attention from procurement professionals:
- Review active contracts for force majeure clauses: Suppliers with Gulf-sourced inputs may invoke force majeure. Understand your exposure and prepare alternative sourcing strategies.
- Budget for cost escalation: Infrastructure and construction bids should factor in 8-12% potential cost increases for petroleum-derived materials and transport.
- Monitor MDB emergency responses: The World Bank, ADB, and AfDB will likely launch emergency programs for food security, energy access, and supply chain resilience — creating new tender pipelines.
- Diversify supply chains: Contractors dependent on Gulf-sourced materials should identify alternative suppliers in non-affected regions.
- Watch the fertilizer market: Agricultural procurement agencies will need emergency tenders for fertilizer sourcing, storage, and distribution.
Looking Ahead
The duration and resolution of this crisis remain uncertain. Eurasia Group analysis from March 9 indicated the crisis is "unlikely to be resolved any time soon." If Strait traffic remains restricted beyond a few weeks, S&P Global warns the impact would be "epochal" — fundamentally reshaping global energy trade patterns and procurement strategies.
For procurement professionals, the immediate priority is monitoring the situation daily and preparing contingency plans. UNCTAD has called on all parties to de-escalate and safeguard maritime transport, ports, and civilian infrastructure. Until shipping normalizes, every procurement budget, timeline, and supply chain assumption is subject to revision.
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