The shutdown of the Strait of Hormuz has prompted new comparisons with the supply shocks of the COVID-19 pandemic and the trade disruptions triggered by US tariffs. COVID exposed the world s heavy reliance on China for manufacturing; the Trump tariff era accelerated efforts to reduce that dependence. The Iran conflict has revealed a different vulnerability: how quickly interruptions to critical raw materials — oil, gas and fertilizers — can ripple through global commerce.
The International Energy Agency said the recent disruptions removed roughly 10 percent of the world s oil supply and about a fifth of global liquefied natural gas, calling it the largest loss in the history of the global energy market. That concentrated hit to energy and commodity flows distinguishes this crisis from the broad demand shock of the pandemic.
Demand and supply shocks compared
The pandemic was primarily a demand shock that also shut factories and choked logistics, exposing the risks of relying on single manufacturing hubs and just-in-time systems. Tariffs prompted a longer, deliberate reshaping of supply chains. By contrast, the Iran war represents an acute supply-side shock focused on energy and other commoditized inputs. Sebastian Janssen, a partner at Oliver Wyman, summarizes the contrast this way: COVID revealed overreliance on a manufacturing hub, while disruptions in Hormuz revealed overreliance on a transport corridor and on energy inputs.
So far non-energy merchandise trade has held up better than during COVID, but energy, chemical and fertilizer prices have surged and forced governments to revise inflation forecasts. Companies and risk managers say the sequence of shocks has altered how they think about vulnerability: COVID proved supply could not be taken for granted; the Iran conflict shows such disruptions may not be one-offs.
Transport, cost and insurance impacts
Shipping lines and energy carriers that once passed through Hormuz are being forced on long detours, many circumnavigating Africa via the Cape of Good Hope. These reroutings can add thousands of nautical miles and up to two weeks to voyages. At the same time, war-risk insurance premiums in the region have spiked, adding millions of dollars in extra cost per transit. Those additional fuel, time and insurance expenses are being passed into prices for energy, chemicals and finished goods.
Full effects still unfolding
Beyond the immediate price shock lies a longer tail of disruption. Janssen and other analysts warn that scarcity is still working its way through multi-tiered supply chains and that downstream effects could take months to surface even after the Strait reopens. A survey by Allianz Trade of 6,000 companies in 13 countries found nearly two-thirds of firms worry about further disruptions and rising energy and commodity prices. The same survey also found geopolitical risk — wars, sanctions and tariffs — has risen to the top concern for roughly two-thirds of companies.
Reshoring, diversification and the rise of +1/+2 strategies
Many firms are reacting by accelerating reshoring and nearshoring plans, especially in Europe. Companies with heavy exposure to China are adopting a +1 or +2 approach, adding one or two alternative sourcing locations to reduce concentration risk. India, Indonesia, Vietnam and Malaysia are among the biggest beneficiaries so far, and interest in moving some manufacturing back to Europe is rising.
Just-in-time inventory strategies are giving way to just-in-case approaches. Factories are building larger buffers, and safety stock levels are at a three-year high, according to GEP s March 2026 Global Supply Chain Volatility Index. The shift reflects a broader conclusion: true resilience requires flexibility, redundancy and deeper strategic partnerships across tiers of suppliers.
A systemic stress test
John Sfakianakis, head of economic research at the Gulf Research Center, cautions that the current vulnerability is less about single-country dependence and more about resilience across interconnected systems such as energy, finance, logistics and political cohesion. In his view the Iran war is not only a regional military crisis but a stress test of how the international system operates under pressure.
What appears likely to stick is a heightened emphasis on geopolitical risk in corporate planning, more diversified sourcing footprints, higher inventory cushions and increased interest in manufacturing closer to end markets. How permanent those shifts will be depends on the duration of the disruption, the pace at which alternative capacity comes online, and whether policymakers and companies invest in the redundant networks and strategic partnerships needed to absorb future shocks.
This article was edited by Srinivas Mazumdaru.