Iran Closes Strait of Hormuz, Triggering Oil Price Surge and Raw Material Cost Inflation

Iran Closes Strait of Hormuz, Triggering Oil Price Surge and Raw Material Cost InflationThe world’s most vital oil chokepoint has been shut, sending shockwaves through global energy markets and supply chains.

Published: April 17, 2026

In a dramatic escalation of tensions in the Middle East, Iran has officially closed the Strait of Hormuz — the narrow maritime passage connecting the Persian Gulf to the Indian Ocean and the world’s single most important oil transit route. The strait, which handles approximately 20% of global petroleum trade and LNG transport, is now under禁航 (navigation ban) as declared by Iranian authorities.

The closure has sent crude oil prices soaring and triggered a cascade of raw material cost increases, putting pressure on manufacturers and consumers worldwide.

From Partial Disruption to Complete BlockadeThe situation escalated after weeks of inconclusive talks between Washington and Tehran. On April 13, following the collapse of peace negotiations, President Trump announced that the US Navy would enforce a naval blockade targeting all vessels entering or leaving Iranian ports. US Central Command (CENTCOM) confirmed that the blockade applies uniformly to ships from any country transiting the Persian Gulf and the Gulf of Oman.

Iran’s Islamic Revolutionary Guard Corps (IRGC) responded by imposing its own restrictions, effectively sealing the strait. Normal oil traffic through the strait, which typically averages 20 million barrels per day (bpd), has been slashed to a mere 2 to 3 million bpd — with most of what little flow remains consisting of Iranian crude destined for China.

According to ING estimates, approximately 13 million barrels per day face disruption from Hormuz access issues.Oil Prices: Volatile and ElevatedThe energy markets have been on a rollercoaster since the closure took effect. At the peak of the crisis, Brent crude surged to $126 per barrel, up from pre-conflict levels of $71.32. This week, prices have remained highly volatile:April 13: Oil prices jumped nearly 9%, with WTI trading above $105 and Brent above $103.April 14: Oil climbed back above $100 as the US blockade officially took effect.April 16: Prices rallied again, with Brent gaining over 3% to trade near $98.April 17: Prices eased amid ceasefire hopes — Brent trading near $98.05, WTI near $93.40 — but analysts warn the relief may be temporary.“Closing the strait entirely will spike oil prices even more than they did before, and put more pressure on the US from the international community.”

— Kavanagh, geopolitical analystHow This Impacts Your Business: Raw Material Costs on the RiseThe Strait of Hormuz is not just about crude oil. The blockage has triggered a domino effect across industrial raw materials, including:Plastics and polymers — derived from petrochemical feedstocksFertilizers — natural gas-based ammonia and ureaAluminum — energy-intensive smelting hit by power costsShipping and aviation fuel — directly tied to crude pricesPharmaceuticals and food products — facing logistics and input cost pressuresAs one analysis noted, the blockade has already caused prices of crude oil, natural gas, fertilizers, plastics, and aluminum to surge, with aviation and bunker fuel following suit. Food, medicine, and petrochemical products are expected to rise as well.

For businesses reliant on imported raw materials — particularly those in manufacturing, packaging, construction, and logistics — these cost increases are now being passed down the supply chain.Shipping Disruptions: A Chaotic Picture at the StraitDespite the blockade, some vessels have attempted — and in a few cases, succeeded — to transit the strait.

A Chinese oil tanker on the US sanctions list became the first known vessel to pass through during the blockade on April 14. Marine tracking data showed the ship circled near the strategic waterway before transiting early Tuesday. Iranian media also claimed that an Iranian supertanker carrying approximately 2 million barrels of crude successfully navigated the strait with its tracking system on.

However, CENTCOM reported that 10 vessels were turned back within the first 48 hours of the blockade, with zero ships successfully breaking through according to US military claims. The US has deployed 12 ships and over 100 aircraft to enforce the blockade in regional waters.

It is worth noting that the US blockade technically targets only vessels traveling to or from Iranian ports, not the strait itself as an international waterway. But with both sides imposing restrictions, the practical effect has been a near-complete shutdown of normal commercial traffic.Ceasefire and Reopening? Uncertainty RemainsAfter weeks of intense conflict between Iran, Israel, and the United States, a two-week ceasefire was reportedly agreed upon, with both sides stepping back from the brink. The ceasefire included a commitment to reopen the Strait of Hormuz, though implementation remains fragile.

On April 17, President Trump expressed optimism about a potential permanent ceasefire deal with Iran, claiming — without evidence — that Tehran had agreed to terms including the reopening of the strait. Simultaneously, a separate 10-day ceasefire between Lebanon and Israel has raised hopes for broader regional de-escalation.

However, analysts caution that the situation remains highly uncertain. The International Energy Agency (IEA) has warned that restoring Strait of Hormuz shipping is critical to easing energy supply tensions and curbing oil price inflation. The agency has sharply downgraded its 2026 global oil demand forecast from growth of 640,000 bpd to a contraction of 80,000 bpd, predicting demand will fall by 1.5 million bpd in Q2 2026 alone.Looking Ahead: What This Means for Global Supply ChainsFor businesses monitoring their input costs, the message is clear: volatility is the new normal.

With the Strait of Hormuz accounting for approximately one-fifth of the world’s oil and gas shipments, any prolonged closure will have far-reaching consequences. Even with a ceasefire in place, the risk of renewed hostilities remains high.

As Schroders Investment noted, oil prices are likely to continue reflecting a Middle East risk premium for the foreseeable future. Companies should prepare for:Continued upward pressure on crude-linked raw materialsElevated shipping and logistics costsPotential supply chain delays for goods transiting the regionIncreased price volatility in petrochemical and energy-intensive sectorsStay tuned to our website for ongoing updates on how global energy and supply chain disruptions may affect your business. We will continue to monitor the situation and provide timely market intelligence.

For inquiries about raw material pricing and supply chain resilience strategies, please contact our procurement team.