March 29, 2026
The most important effects of the current Iran war are no longer only military. They are spreading through energy, shipping, fertilizers, petrochemicals, inflation, and national growth prospects across multiple continents
By NZ
The current Iran war should not be understood only as a regional security crisis. It has become a global systemic risk because it is centered on one of the world’s most important trade and energy chokepoints: the Strait of Hormuz. A useful way to frame this is to combine a systemic-risk lens, which focuses on how tightly coupled global systems transmit shocks, with a geopolitical-fragmentation lens, which highlights how difficult it has become to contain crises in a more leaderless, “G-Zero” world. Princeton’s Global Systemic Risk framing emphasizes that global systems are both highly productive and highly fragile, while Eurasia Group argues that geopolitical fragmentation makes major shocks more contagious and harder to manage. (Princeton Online)
Brookings provides the clearest explanation of why Hormuz matters so much. About 20% of the world’s oil supply and 20% of global LNG supply move through the Strait, and Brookings argues that it does not need to be fully blockaded to destabilize the global economy. If ships become too dangerous to insure, finance, or crew, commercial traffic can collapse even before a textbook military closure occurs. That is what makes this war so consequential: it threatens not just a battlefield zone, but a corridor through which core commodities move into the world economy. (Brookings)
This is where Yossi Sheffi’s resilience work becomes especially relevant. Sheffi defines resilience as an organization’s ability to recover quickly from a major disruption, and he argues that firms build it mainly through some combination of redundancy, flexibility, and organizational culture. He is especially clear that resilience depends more on what a company does before disruption than during it. In the context of Hormuz, that means firms with route visibility, alternate sourcing and transport options, crisis teams, and flexible operating models will fare much better than those that optimized only for efficiency and low cost. (Massachusetts Institute of Technology)
The war’s first-order effect is corridor insecurity. Its second-order effect is commercial paralysis. Brookings highlights the way fear alone can keep ships out of the Strait, and Reuters shows how quickly that commercial disruption is spilling into other sectors. Petrochemical supply has tightened sharply, plastic and polymer prices have risen, and downstream manufacturers in the United States and Europe are already facing higher input costs. This is what systemic shock looks like in practice: one corridor disruption begins to synchronize multiple markets that usually move separately. (Brookings)
The same pattern is visible in food and fertilizer risk. Brookings identifies nitrogen-based fertilizer as one of the most strategically important non-energy products moving through Hormuz, especially during planting season. Reuters reports that the United Nations is now trying to create a mechanism to keep trade moving through the Strait because disrupted fertilizer shipments and soaring energy prices could intensify food shortages and humanitarian crises. The war is therefore no longer just an energy story. It is a developing food-system and development story as well. (Brookings)
The country-level evidence makes the scale of the shock even clearer. India now sees downside risks to growth, inflation, the current account, and import-dependent sectors because of higher energy prices and disrupted supply chains linked to the conflict. Iraq, despite being an oil producer, has seen output plunge as storage fills and exports through Hormuz remain constrained. Egypt is slowing fuel-intensive state projects and cutting government fuel allocations because the war has escalated energy costs and strained public finances. Australia, far from the Gulf, is changing its export-finance laws so the government can help underwrite fuel purchases after cancellations, localized shortages, and heavy exposure to imported fuel. These are not isolated anecdotes. They show how a single chokepoint shock reaches importers, exporters, industrial economies, and fuel-dependent advanced economies through different channels. (Reuters)
There is also a serious risk of multi-chokepoint escalation. Reuters reports that the Houthis are prepared to join the war if needed, raising new shipping risk around Bab al-Mandeb and the Red Sea. If pressure on Hormuz is combined with renewed instability in the Red Sea, the war stops being mainly a Gulf energy shock and starts looking more like a broader disruption to the architecture of global trade. In systemic-risk terms, that would mean stress across multiple critical nodes at once. (Reuters)
The policy and business lessons are now hard to ignore. First, resilience is not only about suppliers; it is about corridors, commodities, and cascading dependencies. A firm can diversify suppliers on paper and still be dangerously exposed if most critical flows move through the same route. Second, commercial confidence is part of resilience. A corridor can become economically unusable before it is fully closed in a military sense. Third, second-order effects matter more than first-order battlefield effects for the global economy. The biggest consequences are already appearing in fertilizers, petrochemicals, plastics, LPG, food prices, inflation, and public budgets. And fourth, Sheffi’s point remains essential: resilience must be built in advance through flexibility, visibility, and preparation, not improvised after the system is already under stress. (Brookings)
The larger conclusion is straightforward. The Iran war has become a global supply chain crisis because it struck a highly connected chokepoint in an already fragmented geopolitical environment. Brookings explains the corridor mechanism. Reuters documents the spillovers. Princeton and Eurasia help explain why those spillovers are so difficult to contain. And Sheffi shows what governments and firms should have been doing all along: designing resilience around the reality that disruption moves through networks, not just headlines. (Brookings)
Sources
Brookings. “Why Iran’s disruption of the Strait of Hormuz matters.” March 19, 2026. (Brookings)
Princeton Online. “Global Systemic Risk.” (Princeton Online)
Eurasia Group. “Top Risks 2025: The G-Zero world has officially arrived.” (Eurasia Group)
Reuters. “Iran war chokes petrochemical supply, sends plastic prices soaring.” March 26, 2026. (Reuters)
Reuters. “UN moves to create mechanism to safeguard Hormuz trade in face of Iran war.” March 27, 2026. (Reuters)
Reuters. “India warns of growth risks from Middle East conflict as energy costs rise.” March 28, 2026. (Reuters)
Reuters. “Iraq oil output further plunges as storage fills, Hormuz exports blocked by conflict.” March 25, 2026. (Reuters)
Reuters. “Egypt to slow down some state projects for two months amid Iran war, prime minister says.” March 28, 2026. (Reuters)
Reuters. “Australia to amend export-finance laws to boost fuel security, PM Albanese says.” March 28, 2026. (Reuters)
Yossi Sheffi. “Building a Resilient Supply Chain.” MIT. (Massachusetts Institute of Technology)
MIT Center for Transportation & Logistics. “Lessons from The Resilient Enterprise and The Power of Resilience.” March 25, 2025. (Center for Transportation and Logistics)
Professor Yossi Sheffi, MIT. “The Power of Resilience.” (Sheffi MIT)
Editor’s Note : Views in the article do not necessarily reflect the views of borkena.com
__
Support Borkena : https://borkena.com/subscribe-borkena/
Join our Telegram Channel : t.me/borkena
Like borkena on Facebook
To submit Press Release, send submission to info@borkena.com
Add your business to Ethiopian Business Listing / Ethiopian Business Directory