![\"Opening](\"https:\/\/www.europesays.com\/iran\/wp-content\/uploads\/2026\/07\/1783445595_325_0x0.jpg\")
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Machinery at Yara International ASA’s 24-megawatt plant for renewable hydrogen production at the company’s Heroya industrial facility in Porsgrunn, Norway, on Monday, June 10, 2024. Europe’s largest fertilizer maker,\u00a0Yara, opened a renewable hydrogen plant in Norway as it seeks to decarbonize a process that uses natural gas as a feedstock. Enterprises such as this one will feel the crunch if the Hormuz crisis continues.<\/p>\n
\u00a9 2024 Bloomberg Finance LP<\/p>\n
This past Saturday, July 4th, saw two major events on the world stage. In America, jubilant crowds celebrated 250 years of independence, replete with fireworks, air shows, sizzling heat, and congratulations from around the globe, including the EU, UK, Germany, Italy, Ukraine<\/a>, Poland, Russia, India, Saudi Arabia, the UAE, Israel<\/a>, and many others. <\/p>\n Meanwhile, in the Middle East, Iran opened week-long mourning ceremonies for former Supreme Leader Ali Khamenei with crowds chanting \u201cDeath to America\u201d<\/a> and carrying red flags, symbolizing the call to revenge<\/a> in a highly choreographed mass event<\/a> attended by representatives of Hezbollah, Hamas, and the Houthis<\/a> as well as delegations<\/a> from Pakistan, Russia, Afghanistan, Turkey, India, and many other countries. The IRGC Navy commander promised \u201cdivine revenge\u201d against the U.S. and Israel, pledging that the \u201cguardians of the strategic Strait of Hormuz\u201d<\/a> would continue Khamenei\u2019s path. <\/p>\n Former U.S. Speaker of the House Tip O\u2019Neill is widely credited with the observation, \u201cAll politics is local.\u201d If so, the \u201csplit screen\u201d effect that has been playing out in Washington and in Tehran may continue for quite some time, but it is very difficult to see how the Iranian regime can or will climb down from the tree and simply allow the Strait to open, much less abandon its nuclear program, missile production, and arming and bankrolling terrorist proxies\u2014even if it wanted to.<\/p>\n Gulf Closures: Beyond Hydrocarbons<\/p>\n Warfare in the Persian Gulf makes headlines for oil. Oil is the easy story. The harder story \u2014 and the one that will impact investors and manufacturers long after the oil price spike subsides \u2014 is unfolding in petrochemical plants, aluminum smelters, and chip fabrication facilities from Stuttgart to Shenzhen. They all depend on inputs that flow through Hormuz. And those inputs are becoming unreliable.<\/p>\n The Strait is not just a strategic oil and gas export route. It is the world’s largest conduit for intermediate industrial materials \u2014 the unglamorous feedstocks that go into everything human beings manufacture. Roughly one-fifth of global oil supply transits through the Strait, according to the IMF’s April 2026 Regional Economic Outlook<\/a>. So does one-third of the global helium trade, a large fraction of global sulfur and ammonia capacity, and a significant share of global petrochemical feedstocks. These are not headline commodities, but all of them are essential.<\/p>\n The disruption will not look like an oil embargo. It will look more like COVID: supplies will at least technically be available, but deliveries may be intermittent, prices volatile, and production schedules progressively less dependable. Oil shocks announce themselves. Feedstock disruptions may accumulate silently \u2014 and then hit everywhere at once.<\/p>\n Petrochemicals: Every Factory Is Downstream<\/p>\n The Gulf does not merely pump oil. It converts it into raw materials and precursors. SABIC, Borouge, QAPCO, and TASNEE \u2014 the region’s industrial chemistry giants \u2014 collectively make the Arabian Peninsula one of the world’s largest producers of ethylene, polyethylene, polypropylene, and methanol. These chemicals underpin automotive components, medical devices, food packaging, electronics, and industrial resins. They go into almost everything manufactured.<\/p>\n In a recent post, the World Bank confirms<\/a> the Gulf’s outsized role in meeting the global petrochemical feedstock demand, consistent with the region’s position as a dominant exporter across its multi-energy export portfolio<\/a>. The operational consequence is direct: less reliable access to these feedstocks means higher inventory costs, price pressure across downstream product categories, and intermittent shortages across multiple sectors simultaneously. Plastic parts for automobiles and surgical instruments cannot simply be sourced elsewhere on short notice. Manufacturers will absorb the higher costs \u2014 and pass them on.<\/p>\n Chemicals: The 40-Percent Shock<\/p>\n Fertilizer is already getting attention. However, the underlying chemical picture is even worse.<\/p>\n Gulf producers \u2014 Saudi Arabia’s SABIC and Ma’aden above all \u2014 are among the world’s dominant exporters of ammonia, methanol, sulfur, and sulfuric acid. These are the raw materials for paints, adhesives, pharmaceuticals, detergents, and metal processing. They flow continuously into supply chains that most analysts never track, until they stop.<\/p>\n The IMF<\/a> has documented the price impact directly: urea futures surged roughly 40 percent after the conflict with Iran began in February 2026. That is a structural shock to agricultural input costs that will feed through to food prices over the next planting cycle. Sulfur and industrial solvents are following the same trajectory. Replacement supply exists in principle. Receiving it in time, and at comparable costs, is a different problem.<\/p>\n Aluminum: The Capital Trap<\/p>\n The Gulf aluminum producers \u2014 Emirates Global Aluminum, ALBA in Bahrain, Ma’aden in Saudi Arabia \u2014 are not marginal players. Their competitive advantage is simple: near-zero energy costs. Their strategic disadvantage is equally simple: they sit behind Hormuz.<\/p>\n There were double-digit price increases<\/a> in aluminum markets after the disruption began. The problem is not outright shortage. It is inventory economics. Aerospace manufacturers, automotive producers, and construction companies run lean on aluminum. Consistent delivery schedules replace warehoused stock. When deliveries become uncertain, companies hold more inventory. That capital is now tied down rather than being deployed for investment or expansion. Thus, higher costs persist long after prices stabilize. This becomes a structural feature of doing business in a riskier world.<\/p>\n Helium and Semiconductors: Qatar’s Leverage<\/p>\n Qatar controls the inert gas required to make computer chips.<\/p>\n Chip fabrication runs on ultra-high-purity helium \u2014 for cooling, purging, and manufacturing process control. There is no practical substitute.<\/a> Qatar, through Qatargas and the world\u2019s largest helium liquefaction trains, accounts for roughly one-third of the global helium trade transiting the Strait, according to the World Economic Forum<\/a>. Semiconductor manufacturers rebuilt supply-chain resilience after the pandemic, but helium supply disruption was not a scenario they were hedging against.<\/p>\n Delays in helium delivery slow wafer production. Slowed wafer production compresses chip supply. That lag \u2014 measured in months \u2014 eventually ripples into AI server buildout, consumer electronics, and automotive chips. The chip industry’s Gulf exposure is almost entirely invisible in standard supply chain risk frameworks. That will change.<\/p>\n Just-In-Time Manufacturing: The Final Casualty<\/p>\n This is where the structural damage becomes permanent.<\/p>\n