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[PART 1]
On February 28th, the United States and Israel launched joint military strikes on Iran. Iran retaliated, including with attacks across the Gulf countries, and then declared the Strait of Hormuz closed. The Strait of Hormuz is the narrow sea passage between Iran and Oman, through which about 20% of the world's oil and natural gas moves every single day. Iran threatened to destroy any vessel that attempted to cross, and over the course of the week, at least six vessels were struck.
Now in normal times, every commercial vessel crossing a high-risk waterway carries something called war risk insurance, which covers damage or loss caused by military action. Without it, the financial exposure on a single loaded tanker runs into hundreds of millions of dollars. Within days of Iran's declaration, the major insurers cancelled war risk coverage for the strait, and once the insurance disappeared, no shipowner could justify sailing anymore. Every major container line suspended operations, and traffic collapsed by 90%.
Then Iranian drone strikes hit Qatar's Ras Laffan complex, which is the largest export facility in the world for LNG. LNG stands for liquefied natural gas, it is natural gas cooled to liquid form so it can be shipped by tanker. Qatar supplies roughly 20% of the world's LNG, and QatarEnergy, the state energy company, halted production and declared force majeure on its delivery contracts. Force majeure is a legal clause that releases a company from its obligations when extraordinary circumstances make performance impossible. So that supply went offline.
Two chains converged last week. The insurance withdrawal closed the strait to oil, the military strikes shut down Qatar's gas, and both fed into energy prices. Brent crude, the global benchmark for oil traded in London, was trading around $73 before the strikes began, and at Friday's close it stood at $93. That is its largest weekly gain since the pandemic crash of 2020.
[PART 2]
The impact on businesses is negative and immediate, and the transmission channel is energy cost.
Oil at $93 feeds directly into diesel, electricity, heating and industrial gas. Now the heaviest exposure sits in Asia, where about 84% of crude oil that normally passes through the Strait is bound. Japan, South Korea, India and China all depend on it. Europe faces a different pressure through gas, because Qatar supplies 12 to 14% of Europe's LNG imports, and that flow has now stopped. But energy markets are global, so a supply shock in the Gulf raises prices everywhere.
And this is a supply shock, not a demand surge. The oil exists, it is sitting in tankers anchored on either side of a strait that no one can cross. Prices are rising, but not because economies are growing. The global economy was already softening before this crisis, the US for example lost 92,000 jobs in February, far below what forecasters expected, and an economy that is already weakening has no cushion to absorb a sudden rise in costs.
Now if the crisis resolves quickly, the damage is manageable, energy prices fall back and shipping will resume. But if the strait stays closed for weeks, the economy moves toward what economists call stagflation. Stagflation is when inflation keeps rising while economic growth stalls or contracts, and here is why it is so dangerous.
In a normal slowdown, central banks cut interest rates, lower rates make borrowing cheaper, cheaper borrowing means businesses invest and consumers spend, and that spending restarts growth. But that tool only works when prices are stable. When inflation is rising because of a supply shock, more spending does not produce more oil, it just pushes prices higher, so central banks cannot cut. But if they hold rates to contain inflation, borrowing stays expensive, and meanwhile customers squeezed by higher energy bills spend less. Revenues weaken while costs rise.
The policy that fights inflation deepens the slowdown. The policy that fights the slowdown accelerates inflation.
Now a shipping disruption is reversible, the day the strait reopens the oil flows again. But here is the deeper risk. When tankers cannot leave the Gulf, the oil that keeps being pumped has nowhere to go, it fills up storage tanks on shore.
Iraq has already cut 1.5 million barrels per day because its tanks are full, Kuwait has started cutting too. And once you
shut down an oil well, you cannot just turn it back on, it takes months to restart. So the longer the strait stays
closed, the less oil exists at all, and at that point the disruption is no longer about shipping, it is about supply that has disappeared.
In each episode, we break down the key global economic event that shaped the past seven days and analyze what it means for business.
In this episode: Strait of Hormuz Shuts Down. With Glenshore's Managing Director Amine Laouedj.
Date of recording: 9 March 2026
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