Beyond oil: The crucial exports blocked by Hormuz closure

The disruption of oil and gas supplies through the Strait of Hormuz, stemming from the ongoing US-Israel conflict with Iran, has resulted in a significant increase in global energy prices.

There has already been a rise in petrol prices, and there are strong indications that heating bills in the UK will soon follow suit.

However, the ramifications of this conflict extend beyond fuel. A wide array of essential chemicals, gases, and products, which typically transit through the Hormuz Strait, are also being affected.

According to BBC Verify, the number of vessels navigating through the Strait has plummeted from over 100 per day prior to the conflict to merely a few. This decline is likely to impact various goods, ranging from food to smartphones and medicines.

The following sections detail the potential impacts.

Fertilisers (Food)

Petrochemicals, derived from oil and gas, are produced in substantial volumes for export by Gulf countries, with fertiliser being one of the most critical chemicals for global agricultural production.

The United Nations reports that approximately one-third of the world's fertilisers, including urea, potash, ammonia, and phosphates, typically move through the Strait of Hormuz.

Small-scale farmers, in particular, depend heavily on urea for crop fertilisation.

Data from the World Trade Organization indicates that since the onset of the conflict, the volume of fertiliser-related exports through the Strait has drastically fallen.

Experts have cautioned that a shortage in fertilisers could adversely impact agricultural output, especially since March and April mark the planting season in the northern hemisphere. Reduced fertiliser application now will likely affect yields later in the year.

According to researchers at the Kiel Institute, "a relatively brief closure could disrupt an entire growing season, with food security repercussions that endure well beyond the strait's reopening."

Their analyses suggest a potential increase in global wheat prices by 4.2% and a 5.2% rise in the cost of fruits and vegetables if the Strait remains closed. Countries most likely to suffer the greatest food price increases include Zambia (31%), Sri Lanka (15%), Taiwan (12%), and Pakistan (11%).

In response, Russia, which typically accounts for around 20% of global fertiliser exports, may be able to ramp up its production to mitigate the shortfall. Kirill Dmitriev, Vladimir Putin's special envoy, stated that Russia is "well positioned" as a major producer of commodities like fertiliser.

Helium (Microchips)

Approximately one-third of global helium shipments are sourced from Qatar and normally traverse the Strait of Hormuz. Helium, a byproduct of natural gas production, is essential for manufacturing semiconductor wafers, which are vital in computers, vehicles, and household appliances.

Additionally, helium plays a critical role in cooling MRI (Magnetic Resonance Imaging) scanners in medical settings.

Production at Qatar's massive Ras Laffan facility has ceased due to Iranian missile and drone strikes, and the Qatari government has warned that restoration may take three to five years, heightening concerns over future helium supply.

In 2023, the US Semiconductor Industry Association cautioned that disruptions could lead to "price spikes" in helium.

Analysts predict that the blockade of Hormuz could escalate prices across a range of advanced technologies, including smartphones and data centres. Prashant Yadav, a senior fellow for global health at the Council on Foreign Relations, has highlighted the likelihood of rising MRI prices stemming from helium shortages, noting, "Every time you do a scan, a little bit of that [helium] boils off or evaporates."

Petrochemical derivatives (Medicines)

Petrochemical derivatives such as methanol and ethylene are fundamental components in the global production of pharmaceuticals, including pain relievers, antibiotics, and vaccines. Many vaccines are synthesized from petrochemical products.

The Gulf Cooperation Council countries (Saudi Arabia, Qatar, Oman, the United Arab Emirates, Kuwait, and Bahrain) are estimated to contribute roughly 6% of the world's petrochemical production capacity. These nations predominantly use the Strait of Hormuz to export these chemicals globally, with around 50% destined for Asia.

India is a key player as it produces approximately 20% of the world's generic pharmaceutical exports, many of which are destined for the United States and Europe. However, disruptions at Gulf hub airports, particularly in Dubai, have severely affected the transportation of these pharmaceutical goods.

Analysts are warning that households may experience increased medicine prices due to the supply chain interruptions caused by the closure of the Strait of Hormuz.

Sulphur (Metals/Batteries)

Sulphur is another byproduct of crude oil and natural gas processing and is produced in substantial quantities for export primarily by Gulf nations. Around half of the global seaborne sulphur trade typically traverses the Strait of Hormuz.

Its primary application is as an agricultural fertiliser, but it is also critical for metal processing. Sulphur is a key ingredient in the production of sulphuric acid, utilized for processing metals like copper, cobalt, and nickel, as well as for lithium extraction.

These metals are essential for battery production, powering everything from home appliances to electric vehicles and military equipment, including drones.

Experts caution that continued interruptions in sulphur supplies are likely to drive up prices for consumers of battery-driven products.