Hormuz Part 2: the hidden hydrocarbon economy

This is the second of two blogs looking at the impact and importance of the closure of the Strait of Hormuz.  Part 1 was an overview of the issue and its potential geopolitical importance.  Part 2 looks at the potential implications in detail.

Modern economies burn hydrocarbons. They build with them, wrap and package with them, fertilise with them, cool with them, fly with them, clean with them, seal with them, lubricate with them, and sterilise with them. Medicines and medical systems depend on plastics, sterile packaging, solvents, cold-chain logistics, and reliable transport. A disruption in these inputs can mean delayed prescriptions, harder procurement, higher NHS costs, and greater counterfeit risk. Semiconductor manufacturing depends on specialist gases, including very pure helium, as well as precision chemicals and uninterrupted logistics. This means the crisis can reach into hospitals, diagnostics, chip production, AI infrastructure, defence electronics, and advanced manufacturing.

That is why the closure of the Strait of Hormuz matters so deeply. The visible disruption is fuel. The wider shock runs through the material economy: oil, gas, refined products, petrochemicals, fertilisers, industrial gases, shipping, insurance, supply chains and confidence.

The calm on these issues so far is misleading. Strategic reserves, commercial inventories, rerouting, emergency procurement, and private stock drawdowns have cushioned the immediate impact. They have also concealed the scale of the underlying disruption. They leave the harder problems untouched: damaged infrastructure, missing fertiliser, nervous insurers, disrupted shipping, and crop decisions whose consequences will take months to appear.

The IMF’s April 2026 outlook already reflects this delayed damage: it lowered the pre-conflict global growth forecast from 3.4% to 3.1% under a limited-conflict assumption, with sharper falls in adverse and severe scenarios, and with commodity-importing emerging and developing economies most exposed.

Our first blog set out the geopolitical and economic importance of the Strait. This second blog looks at the consequences. Modern supply systems were designed around availability, low friction, and predictable movement. When key inputs become expensive, delayed, prioritised, or unavailable all at the same time, the pressure spreads quickly from markets into businesses, public services, households, and political systems.

What this means: First-, Second- and Third-Order consequences

SAMI uses a Futures Wheel approach, modified by overlaying a PESTLE structure: political, economic, social, technological, legal and environmental. In practice, this means overlaying the futures wheel circles within PESTLE segments, so that each consequence is considered both by order of impact and by type of effect. The table below translates that visual method into text. It shows how hidden hydrocarbon dependencies can move from first-order disruption to second-order systems impacts, and then to third-order consequences.

Dependency and PESTLE lens	First-order effect	Second-order effect	Third-order effect
Fertilisers, farming, and food (P, E, S, Env)	Gas, ammonia, urea, diesel, refrigeration, packaging, shipping, and processing costs rise.	Farmers cut inputs; retailers shrink ranges, raise prices, or prioritise staples.	Lower yields, higher prices, poorer diets, malnutrition, excess deaths, unrest, and instability in food-importing states.
Plastics, packaging, and medical supplies (E, S, T)	Polymers, additives, sterile packaging, solvents, and cold-chain inputs tighten.	Food, medicines, hospitals, retail goods, and logistics become less reliable.	Shorter shelf life, product shortages, counterfeit risk, and health-system stress.
Industrial chemicals, specialist gases, chips, and high technology(E, T, P)	Methanol, resins, lubricants, coatings, helium, and specialist gases become scarce or delayed.	Manufacturing, pharma, electronics, MRI, defence systems, semiconductors, and AI supply chains slow.	Critical materials policy expands from minerals to chemistry, specialist gases, and high-purity process inputs.
Construction, infrastructure, and net-zero delivery(E, P, Env)	Bitumen, asphalt, PVC, insulation, sealants, adhesives, cable materials, and diesel plant rise in cost.	Projects face delays, redesigns, claims, and cost escalation.	Housing, grid, water, transport, hospitals, and net-zero infrastructure become harder, slower and riskier to deliver.
Public trust, legal order, and commercial confidence (P, S, L, E)	Fuel, food, medicines, insurance, contracts, shipping permissions, and prices become less reliable.	Hoarding, theft, black markets, fraud, protests, force majeure and insurance exclusions increase.	Riots, emergency powers, repression, instability, or government collapse in weaker states.

Each part of the PESTLE pie is damaging on its own, but the real impact occurs when they interact. Several chains moving together create a far larger test of resilience.

Implications

For governments, this becomes a national resilience issue. The right products and derivatives must reach the right systems in time: diesel for food distribution, fertiliser for farms, packaging for medicines, bitumen for roads, solvents for pharmaceuticals, and helium for high-value technology. If these systems break down, the consequences can include loss of public trust, shortages of food and medicines, illness, and deaths.

For businesses, it means that supplier risks now extend well beyond obvious energy costs. A manufacturer may have electricity, labour, and customer demand, yet still be stopped by a missing resin, lubricant, sealant, solvent, film, gas, or packaging format. Boards should ask which quiet dependency could stop their organisation before that dependency fails.

For citizens, the crisis may manifest first as ordinary irritations before it becomes a dramatic shortage: dearer food, fewer product choices, longer delivery times, poorer packaging, delayed prescriptions, more expensive repairs, cancelled flights, and rising costs across the board. If petrol and diesel stay expensive, getting to work becomes part of the crisis. Rural households, low-paid commuters, shift workers, carers, tradespeople, delivery drivers, and people in places with weak public transport may find that work itself becomes more expensive to reach. Costs may be the first visible symptom. Mobility, income, and household resilience follow. The food chain carries the gravest human risk. If fertiliser becomes too expensive or unavailable at the right time, farmers use less of it. If farmers use less of it, yields fall. In wealthy countries, that means higher prices and harder choices. In poorer food-importing countries, it means hunger, malnutrition, and starvation.

The delay makes the danger easier to miss. The decision to cut fertiliser use may be made months before the consequences appear in harvests, food prices, humanitarian appeals, and political unrest. By that point, much of the damage has already entered the soil.

The construction risk is not only delay. When materials become scarce and costs rise quickly, substitution pressure increases. Clients and contractors may be tempted to use cheaper, unfamiliar, poorly documented, or lower-quality alternatives. In a sector still living with the consequences of past building-safety failures, that risk deserves explicit attention.

Social order rests on ordinary expectations being met most of the time. People expect fuel at the pump, food in shops, medicines from pharmacies, deliveries that arrive, prices that make some sense, and governments that can explain what is happening. When these expectations fail together, trust falls faster than supply. Hoarding becomes rational. Rumour becomes information. Black markets become distribution systems. Protest becomes a way to be heard.

That is why the crisis could become most dangerous in countries with weak currencies, high dependence on food imports, limited fiscal space, heavy fuel subsidies, and low trust in government. Expensive energy, expensive fertiliser, expensive grain, weak public finances, and frightened households form a combustible mix. In such conditions, disorder can spread quickly: queues, hoarding, price spikes, riots, emergency powers, violent repression, or the fall of governments that appear unable to protect daily life.

Where you are matters

The geography of the crisis is uneven. Gulf producers face damaged infrastructure, trapped exports, lost revenue, port disruption, insurance problems, domestic subsidy pressures, and legitimacy risks. Energy exporters gain little from high prices if they struggle to export. Reserves in the ground become stranded assets.

The states that rely on Gulf hydrocarbons face a different problem. East Asia is exposed through LNG, petrochemicals, semiconductors, helium, and manufacturing inputs. Europe and the UK face risks in diesel logistics, aviation, gas prices, fertilisers, food, inflation, and public trust, even where direct supply comes from outside the Gulf, because LNG competition and global pricing transmit the shock. South Asia faces energy price pressures, fertiliser access constraints, aviation disruptions, food price pressures, and poverty. Food-importing and low-income states face the harshest combination: expensive energy, expensive fertiliser, expensive grain, weak currencies, limited public funds, and populations with little margin for further hardship.

Reopening is only the beginning of recovery

Duration will shape the severity of these effects.

If the crisis eases this summer, it will still take months for things to return to normal. Damaged infrastructure must be repaired. Ships and crews must return. Insurance must be repriced. Inventories must be rebuilt. Delayed cargoes must be sequenced. Buyers must decide whether they trust the route again. Reopening would reduce the acute pressure while leaving months of repair, repricing, and restocking.

If disruption drags into late 2026, and as national fuel stockpiles dwindle, the crisis becomes one of managing scarcity. Firms begin substituting materials, cutting product lines, rationing inputs, and passing costs through. Farmers make fertiliser decisions that shape the next harvest. Governments face pressure to support households, food producers, hauliers, airlines, manufacturers, public services, and vulnerable communities. Governments would have to decide which systems receive protection first and how much to spend from Treasuries already strained by pandemic support, higher debt-servicing costs, aging populations, defence spending, and existing cost-of-living pressures. The private sector would have to plan around persistent uncertainty.

If this becomes a frozen blockade, the strategic logic changes. Ships may still pass, but under conditions of inspection, levy, delay, military risk, uncertain insurance, and political permission. That would turn a maritime crisis into a standing cost on global trade. Firms would redesign supply chains around Gulf risk. States would treat fertilisers, chemicals, gases, and refined products as strategic dependencies. The risk associated with critical bottlenecks would become a material concern for investors, boards, and governments.

Learn the system before you break it

The larger lesson is simple: understand what depends on a system before you break it.

Governments contemplating military action need to understand the systems they are putting at risk. A decision taken in the language of security can become a food shock, a health-system shock, an industrial shock, a poverty shock, and a political-order shock.

Boards should draw the same lesson in their own domain. Advanced organisations often depend on obscure inputs, fragile logistics, and quiet assumptions about global order. The Strait of Hormuz crisis is exposing those assumptions at speed.

This is also a resilience lesson. Governments, businesses, public services, and households all need to understand where their own exposure lies: which inputs they depend on, which suppliers have weak substitutes, which routes carry hidden risk, and which services would fail first under pressure. In a world where reckless actors can create systemic shocks, resilience planning becomes part of responsible leadership.

The greatest danger is when crises coincide. Societies can absorb one expensive shock. They struggle when fuel, fertiliser, packaging, freight, food, medical supplies, infrastructure materials, and public confidence all tighten together. If the Strait remains unreliable for long enough, modern economies will find it hard to build, wrap, fertilise, cool, fly, clean, seal, lubricate, and sterilise at the same time. Or maybe at all.

Written by David Lye, SAMI Fellow, Patricia Lustig, SAMI Principal, Jonathan Blanchard Smith, SAMI Director & Fellow

The views expressed are those of the author(s) and not necessarily of SAMI Consulting.

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Image by Gerd Altmann from Pixabay