The joint strikes launched by the United States and Israel on Iran over the weekend, in an initiative geared halting Iran’s development of nuclear weapons, are expected to bring about various logistics- and supply chain-related issues on various fronts, according to industry observers.
Those issues include things such as the likelihood of higher energy prices, restricted shipping lanes in and around the Middle East, as well as the most recent example in what could be viewed as an ongoing series of heightened global logistics challenges, or concerns, among others.
Bruce Chan, Managing Director, at investment firm Stifel, observed in a research note that perhaps the biggest takeaway of this development is that the conflict has caused a shuttering of the Straight of Hormuz “and a prolonging effect of reduced Suez Canal and Red Sea shipping traffic.”
Which, in turn, reduced recent signs that Red Sea shipping traffic, that, going back to late 2023, when an ongoing series of attacks on the Red Sea shipping lane by the Yemeni Houthi pirates in response to the ongoing Israel-Palestine conflict took hold, had started to show signs of a return to more normalized operations. Prior to the late 2023 attacks, the Red Sea/Suez Canal shipping route saw 10%-to-15% of global maritime trade moving through it, according to industry estimates.
In terms of ocean cargo operations, Chan explained that the conflict could curtail global fleet capacity and also keep ocean container rates elevated for longer, adding that in the aftermath of these strikes on Iran by the U.S. and Israel have seen container shipping lines suspend transit through the Strait of Hormuz—representing around 2% of the global ocean container fleet.
“Increased uncertainty from geopolitical conflict presents a broad risk to demand, especially if fuel prices increase substantially enough to affect consumer discretionary expenditures,” wrote Chan.
Daniel Moore, Baird & Co. analyst, noted that the ostensible closing of the Straight of Hormuz is viewed as “especially critical because around 20% of global petroleum liquids consumption and roughly one-third of globally traded seaborne crude oil, which is equivalent to 17 million-to-20 million barrels per day move through it, adding that 90% of Saudi Arabia’s oil exports flow through the Strait of Hormuz.
As for the nations most impacted by this conflict, Moore cited the following: India imports around 85% of its oil needs, approximately 60% of which comes from the Gulf; China sources around 40% of its oil needs via the Strait of Hormuz, which is especially significant given its reliance on Venezuela, which is now effectively controlled by the U.S; and it is reasonable to expect meaningful consequences for Japan, which imports 90% of its oil needs, approximately 60%-70% of which comes from the Gulf region.
“The most immediate consequence of these developments is higher energy prices,” wrote Moore. “However, the impact is unlikely to stop there. Disruption to maritime corridors will likely push container rates incrementally higher in some lanes as transit times lengthen and insurance premiums rise. At the same time, shippers seeking to mitigate delay risk may shift incremental volume to air cargo, increasing demand for lift capacity, which is likely to place upward pressure on airfreight rates across much of the region. We expect the direct economic impact on U.S. and European markets to be more limited.”
Commentary from Peter Sand, chief analyst, for global freight intelligence platform Xeneta, observed that repercussions of this conflict will see what he described as the further weaponization of trade and also shatter hopes of a largescale return of container shipping to the Red Sea this year.
“Carriers had been returning selected east-west ocean container services to transits via Suez Canal in recent months after sailing around Cape of Good Hope since late 2023 due to attacks by Iran-backed Houthi militia in the Red Sea region,” noted Sand. “If Houthi militia resume attacks, as now seems likely, carriers will reverse the decision to return services to the Red Sea and prioritize the safety of crew, ship and cargo. Any plans for a phased return of container shipping to the Red Sea in 2026 will be shelved until the security situation becomes clearer. Carriers are on red alert and we have seen signs of them pre-empting this security deterioration in the Middle East, notably with CMA CGM last month reversing a decision to return its FAL1, FAL3 and MEX to the Red Sea citing ‘the complex and uncertain international context.’”
And with a largescale return of container ships to Red Sea in 2026 now unlikely, Sand said that freight rates on major global trades will continue to soften, but will not fall as hard as previously expected in the second half of the year as more services returned to Suez Canal transits.
Chris Clowes, associate director at SCALA, a global supply chain and consultancy, said that from a supply chain perspective, the biggest risk of the escalation in the Middle East is wider instability that could affect both energy prices and the routes used to move everyday goods.
“Air freight is likely to feel the impact fastest,” said Clowes. “If airlines must avoid certain airspace, capacity falls and flight times increase, pushing up rates quickly, with time-critical goods such as medicines, semiconductors and high-value technology among the most exposed. When it comes to sea freight, which is typically used to transport everything from clothing to consumer electronics, the Suez Canal isn’t formally closed, but if security risks rise, more Asia to Europe services are likely to divert via the Cape of Good Hope. That can add around 10-to -15 days and increase fuel and insurance costs. Longer voyages also tie up ships and containers, which can tighten wider capacity and push up rates beyond the region. Then there is the matter of energy; even partial disruption or perceived risk around the Strait of Hormuz could trigger a rapid rise in oil and liquefied natural gas prices, feeding through into transport, manufacturing and packaging costs in turn.”
