A potential closure of the Strait of Hormuz could send shockwaves through global logistics—not just oil markets—with container shipping, port operations, and supply chains bracing for significant disruption.
The Strait of Hormuz may only account for less than 4% of global container throughput, but that slice is crucial. Ports like Jebel Ali in the UAE and Khor Fakkan in Sharjah depend on uninterrupted access to this narrow waterway. These Gulf ports act as vital transshipment hubs, linking Asia, Europe, and Africa. Jebel Ali, in particular, is the region’s heavyweight, handling cargo that fuels trade routes far beyond the Middle East.
Immediate Shipping Impacts
If tensions escalate into a full-blown blockade, container vessels would be forced to reroute thousands of nautical miles around the Cape of Good Hope. This detour could add up to two weeks of transit time between Asia and Europe. According to Tradlinx, this would slash available vessel capacity by between 9% and 15% almost overnight.
Ports like Jebel Ali could experience congestion levels not seen since the height of the pandemic. Waiting times could triple, and regional connectivity would suffer. Feeder services serving the Indian subcontinent, East Africa, and the Red Sea would be hit hard, causing cargo rollovers, booking cancellations, and delays for everything from electronics to raw materials.
Cost Shock for Freight and Risk Coverage
Spot freight rates are already rising. Shanghai to Jebel Ali rates surged 55% month-over-month in June. If the Strait closes, broader Asia-Europe lanes could face increases of up to 230% year-on-year. That hits importers—and eventually consumers—with higher costs on goods ranging from household appliances to vehicle components.
War-risk insurance premiums have also jumped 40–60% for ships operating in or near the Strait. That translates to tens of thousands of dollars in added cost per voyage. Insurers are recalibrating risk models, and some underwriters may start pulling back entirely if the threat environment worsens.
Ripple Effects on Supply Chains
This isn’t just about container traffic or oil. Jebel Ali serves as a linchpin in global logistics—supporting supply chains for Europe, Africa, and South Asia. Raw materials, electronics, foodstuffs, textiles, and automotive parts move through the port in huge volumes. Delays here ripple out to manufacturers and retailers across three continents.
The region also exports more than 16% of global seaborne fertilizers and a third of the world’s LNG, both heavily dependent on Strait of Hormuz transit. Supply gaps would not only drive up prices but also lead to shortages in industrial, agricultural, and power sectors, particularly in Asia and Europe.
Broader Economic Repercussions
As freight costs rise and deliveries slow, inflation could spike again—particularly in energy-importing regions like Europe and South Asia. Central banks are already on edge. A supply shock now could reignite monetary tightening, just as many economies are trying to stabilize post-inflationary cycles.
Energy diversification won’t come quickly enough. While countries can draw on strategic reserves, LNG is much harder to redirect than oil due to infrastructure limitations. Price volatility is almost certain.
Meanwhile, governments may deploy naval forces to safeguard shipping, increasing the likelihood of military incidents in a region already on edge. Iran’s parliament, according to recent reports, has officially approved a motion to block the strait, underscoring the seriousness of the threat.
The Strategic Importance of Jebel Ali
Jebel Ali isn’t just another container port—it’s the UAE’s trade gateway, employing tens of thousands and contributing billions in GDP. Its role connects sea, air, and road transport across the Middle East, and closures at Hormuz would fracture this multimodal efficiency.
The UAE’s vision to be a global logistics hub depends heavily on smooth operations at Jebel Ali. A disruption of this scale would test the resilience of not just local businesses, but global brands that rely on the port’s connectivity and speed.
