Could Iran War Disrupt Globalization and World Trade Routes?
The war involving Iran has moved beyond a regional security crisis. It now raises a broader economic question: Could prolonged conflict around Iran disrupt globalization and the world’s major trade routes?
The answer depends largely on how long the conflict lasts and whether fighting spreads to critical maritime chokepoints such as the Strait of Hormuz, the Red Sea, Bab el-Mandeb, and the Suez Canal.
The risks are significant because global trade depends heavily on maritime transportation. UN Trade and Development (UNCTAD) says ships carry more than 80% of world trade. Recent disruptions have already forced vessels to take longer routes, increased freight costs and created additional pressure on global supply chains.
As a result, a wider regional conflict could affect much more than oil prices. It could influence shipping insurance, manufacturing costs, food prices, energy supplies, delivery times and the structure of international trade.
Why Iran Matters to Global Trade
Iran sits near several of the world’s most important maritime routes.
Most importantly, the Strait of Hormuz connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. Oil tankers and LNG carriers use the waterway to transport energy from major Gulf producers to international markets.
According to the U.S. Energy Information Administration (EIA), around 20 million barrels of petroleum liquids per day passed through the Strait of Hormuz in 2024. That represented roughly 20% of global petroleum liquids consumption and more than one-quarter of global seaborne oil trade. Around one-fifth of global LNG trade also passed through the strait.
Therefore, disruption in Hormuz can quickly become a global economic problem.
Hormuz Is Especially Important to Asia
The impact would not fall evenly across the world.
EIA estimates that 84% of crude oil and condensate and 83% of LNG moving through Hormuz went to Asian markets in 2024. China, India, Japan and South Korea represented major destinations for crude and condensate shipments.
Consequently, prolonged disruption could create particularly strong pressure on Asian energy markets.
What Is Happening to Shipping Through Hormuz?
The current conflict has already affected vessel movements.
Reuters reported on September 21, 2026, that only 17 commodity vessels crossed the Strait of Hormuz over the weekend, compared with 37 the previous week and a pre-war average of roughly 125 vessels per day.
The International Maritime Organization (IMO) has also reported serious attacks on merchant shipping. As of September 16, the organization had verified 80 attacks on international shipping in and around the Strait of Hormuz, with at least 22 seafarers killed.
These developments demonstrate why shipping companies may avoid the region even when a route technically remains open.
For shipping operators, the calculation involves more than distance. They must consider crew safety, insurance costs, vessel security, fuel consumption, port availability and the possibility of sudden attacks.
Could the Red Sea Become Another Major Problem?
Yes.
The Red Sea connects the Indian Ocean with the Mediterranean through the Suez Canal. It provides one of the fastest maritime connections between Asia and Europe.
However, attacks and security risks in the region have already pushed many vessels toward longer routes around Africa.
UNCTAD reported that by May 2025, tonnage moving through the Suez Canal remained about 70% below 2023 levels. The organization also noted that rerouting increased shipping distances and contributed to higher freight costs.
If the Iran conflict intensifies and attacks spread across the Red Sea or Bab el-Mandeb, shipping companies could face even greater pressure to avoid the entire corridor.
Why the Suez Canal Matters
The Suez Canal can dramatically shorten the maritime journey between Asia and Europe.
When vessels avoid the canal, they can instead travel around the Cape of Good Hope at the southern tip of Africa.
That alternative protects ships from some regional risks, but it creates another problem: distance.
Longer voyages require:
- More fuel
- More crew time
- Additional insurance
- More ships to maintain the same shipping capacity
- Longer delivery schedules
- Higher transportation costs
Therefore, even when cargo eventually reaches its destination, the cost of globalization can rise.
Could Multiple Chokepoints Be Disrupted at the Same Time?
This represents one of the biggest risks.
Imagine a situation in which shipping faces serious disruption around several corridors simultaneously:
Strait of Hormuz → Gulf of Oman → Bab el-Mandeb → Red Sea → Suez Canal
A problem at one location can often be managed through rerouting.
However, several simultaneous disruptions would leave shipping companies with fewer practical alternatives.
The problem would become particularly serious for energy products because oil and LNG cannot always move through alternative routes at the same scale.
Global Trade Depends on More Than One Chokepoint
The global economy also depends on the Panama Canal, Malacca Strait, Bosporus and other strategic maritime corridors.
Recent disruptions have already shown how vulnerable international shipping can become when several trade routes face pressure at the same time.
UNCTAD previously warned that disruptions in the Suez, Panama and Black Sea routes were reshaping global trade patterns and increasing transportation costs.
The Iran conflict therefore arrives at a time when global supply chains are already adapting to geopolitical and logistical risks.
How Could an Iran War Affect Globalization?
Globalization depends on predictable movement of goods, energy, capital and information.
War does not necessarily stop globalization. However, it can make globalization more expensive and less predictable.
1. Higher Energy Prices
The most immediate risk involves oil and gas.
If fewer tankers can safely move through Hormuz, markets may anticipate tighter supplies.
That expectation alone can influence crude oil prices.
Higher energy costs can then spread throughout the economy because transportation, manufacturing, agriculture and electricity generation all depend directly or indirectly on energy.
2. Higher Shipping Costs
Shipping companies may respond to greater risks by rerouting vessels.
Longer routes increase fuel consumption and voyage times.
Additionally, insurers may charge more for vessels entering high-risk areas.
Consequently, the cost of moving products between continents can increase.
3. More Expensive Consumer Goods
Higher transportation costs rarely remain limited to shipping companies.
Importers and manufacturers may eventually pass part of those expenses to consumers.
That could affect prices for electronics, clothing, automobiles, machinery, food and other internationally traded products.
4. Manufacturing Delays
Modern manufacturing often depends on components arriving from multiple countries.
A factory may manufacture one component in China, another in South Korea and assemble the final product somewhere else.
If maritime transportation becomes unreliable, manufacturers may experience shortages even when the underlying products remain available.
As a result, companies could increase inventories or search for suppliers closer to their domestic markets.
5. More Regional Supply Chains
A prolonged crisis could accelerate a trend that was already developing before the current conflict.
Companies increasingly talk about:
- Nearshoring
- Friend-shoring
- Supply-chain diversification
- Domestic manufacturing
- Strategic stockpiles
- Multiple sourcing
Therefore, an extended Iran conflict could encourage businesses to reduce their dependence on single shipping corridors.
Could This Lead to the “De-Globalization” of Trade?
A major distinction is important here.
A disruption to shipping does not automatically mean the end of globalization.
Instead, globalization could change form.
Companies may continue trading internationally while building more resilient supply chains.
For example, a manufacturer that previously depended on one supplier may add suppliers in two or three countries. Similarly, an importer that relied on one maritime route may develop alternative logistics arrangements.
Therefore, the likely long-term effect would depend on the duration and scale of the conflict.
Short Conflict vs. Prolonged Conflict
A short disruption could create temporary price increases and shipping delays.
A prolonged disruption could encourage permanent changes in corporate investment and trade infrastructure.
That distinction matters.
UNCTAD has already observed that geopolitical disruptions are changing shipping routes and increasing voyage distances.
If businesses begin treating Middle Eastern shipping risks as a permanent feature of global commerce, they may redesign supply chains accordingly.
Which Countries Could Face the Greatest Economic Pressure?
The consequences would vary considerably.
Asian Energy Importers
China, India, Japan and South Korea could face significant exposure because Asian markets receive a large share of the energy transported through Hormuz.
Higher energy costs could increase import bills and put pressure on industries that depend heavily on oil and gas.
European Economies
Europe could face indirect effects through energy markets, shipping costs and disruptions to Asia-Europe trade.
If vessels avoid the Suez Canal, cargo moving between Asia and Europe would face longer journeys.
Gulf Producers
Oil-exporting countries could also face difficulties.
They may have the resources to benefit from higher energy prices, but physical inability to move exports through disrupted routes can offset some of those benefits.
This creates a complicated situation: higher prices do not necessarily compensate for lower export volumes.
What Happens to Food Prices?
Energy and shipping disruptions can eventually affect food markets.
Agricultural production requires fuel, fertilizer, machinery and transportation.
Furthermore, food often travels through multiple stages before reaching consumers.
If fuel and freight costs rise, producers, wholesalers and retailers may face higher expenses.
UNCTAD has previously warned that prolonged shipping disruptions can increase food prices and threaten supply-chain stability.
Therefore, the effects of an Iran-related shipping crisis could reach households far away from the Middle East.
Could Air Freight Replace Ocean Shipping?
Only partially.
Air freight can move valuable or time-sensitive goods much faster than ships.
However, aircraft cannot economically replace maritime shipping for enormous volumes of crude oil, LNG, bulk commodities and many low-margin manufactured products.
That means companies can use air freight for selected products, but it cannot fully solve a widespread maritime disruption.
Could Pipelines Reduce the Risk?
Pipelines can provide alternatives for some energy shipments.
For example, Gulf producers have invested in infrastructure that can move oil toward alternative export terminals.
However, pipeline capacity remains limited compared with the enormous volumes normally transported by sea.
EIA notes that alternative infrastructure exists, but the options cannot fully replace the scale of flows through Hormuz.
Consequently, pipelines can reduce vulnerability without eliminating it.
How Would Shipping Companies Respond?
Shipping companies have several options.
They could:
- Reroute vessels around dangerous waters.
- Increase security measures.
- Raise freight rates.
- Seek higher war-risk insurance coverage.
- Delay voyages.
- Use alternative ports.
- Increase fuel reserves.
- Adjust sailing schedules.
However, every alternative creates additional costs.
That is why shipping disruption can affect global trade even when cargo continues moving.
Could Globalization Survive the Crisis?
Yes, but the structure of globalization could change.
The world economy has repeatedly adapted to wars, sanctions, pandemics, financial crises and transportation disruptions.
However, each major disruption can encourage companies and governments to reconsider supply-chain dependence.
The current crisis could therefore accelerate several existing trends:
More regional production + diversified suppliers + strategic stockpiles + alternative shipping routes
Rather than completely abandoning globalization, companies may pursue a more resilient version of it.
What Would a Worst-Case Trade Scenario Look Like?
The most serious scenario would involve prolonged disruption across several maritime chokepoints at the same time.
For example:
Hormuz disruption → higher oil and LNG prices → higher transport costs → Red Sea avoidance → Suez disruption → longer Asia-Europe shipping routes → manufacturing delays → higher consumer prices
That chain reaction could create a much wider economic shock.
The risk becomes greater if attacks continue for months rather than days or weeks.
The IMO’s recent reporting of attacks on merchant vessels demonstrates why maritime security remains a central concern.
What Could Prevent a Global Trade Shock?
Several factors could limit the damage.
Diplomatic De-escalation
A reduction in military tensions would immediately lower some shipping risks.
Alternative Energy Routes
Pipelines and alternative export terminals could help reduce dependence on Hormuz.
Strategic Oil Reserves
Governments can use strategic petroleum reserves to cushion temporary supply disruptions.
Shipping Diversification
Companies can use alternative routes and ports when economically viable.
Supply-Chain Resilience
Manufacturers can maintain larger inventories and develop multiple suppliers.
However, these measures cannot completely replace normal shipping capacity if major maritime corridors remain disrupted for an extended period.
Frequently Asked Questions
Could the Iran war disrupt global trade?
Yes. A prolonged conflict could disrupt major shipping corridors, particularly if vessel traffic through the Strait of Hormuz or nearby Red Sea routes remains severely restricted.
Why is the Strait of Hormuz so important?
Hormuz carries a very large share of global energy trade. EIA estimates that around 20 million barrels of petroleum liquids per day passed through the strait in 2024, equivalent to about 20% of global petroleum liquids consumption.
Could Iran close the Strait of Hormuz?
Iran can threaten or attempt to restrict shipping through the strait, but maintaining a prolonged closure involves significant military, economic and diplomatic consequences. Current shipping data shows that vessel traffic has already fallen sharply during the 2026 conflict.
Would an Iran war cause global inflation?
It could increase inflationary pressure if the conflict produces sustained increases in oil, gas, shipping, insurance and transportation costs. The final impact would depend on the duration and scale of the disruption.
Would Europe be affected?
Yes. Europe could face higher energy and transportation costs. Additionally, disruption around the Red Sea and Suez Canal could make Asia-Europe shipping slower and more expensive.
Would India be affected?
India could face exposure through energy prices, shipping costs and import expenses because Asian markets receive a large share of the energy transported through Hormuz.
Does this mean globalization will end?
Not necessarily. A prolonged conflict could instead encourage businesses to diversify suppliers, build regional production capacity and use alternative trade routes.
Conclusion
The Iran war could become a major test for the resilience of globalization.
The key issue is not simply whether fighting continues. It is whether the conflict can disrupt several interconnected trade routes at the same time.
The Strait of Hormuz represents the most immediate energy risk. The Red Sea, Bab el-Mandeb and Suez Canal create another layer of vulnerability for global shipping.
Recent data already shows sharply reduced vessel traffic through Hormuz, while international maritime authorities have documented attacks on merchant ships.
However, global trade has alternatives. Ships can reroute, governments can release strategic reserves, companies can diversify suppliers and energy producers can use alternative infrastructure.
The bigger long-term question is therefore not whether globalization survives, but what globalization looks like after repeated disruptions to the routes that made international trade efficient.
If the conflict remains contained, the effects may remain largely concentrated in energy and shipping markets. If several maritime chokepoints remain disrupted for a prolonged period, however, businesses could accelerate supply-chain diversification and regional manufacturing.
In that sense, the Iran conflict could become another turning point in the evolution of global trade—from a system built primarily around maximum efficiency toward one that places greater emphasis on security, redundancy and resilience.
