The Middle East conflict: What supply chain and procurement leaders should do now

Published on 16 March 2026

By Matthew Lekstutis

Escalating military activity involving the United States, Israel, and Iran is introducing significant disruption across global logistics networks and commodity markets. For organisations operating in or trading through the Middle East and North Africa (MENA) region, the implications extend well beyond regional security concerns. In fact, the International Energy Agency (IEA) has called it “the largest supply disruption in the history of the global oil market.”

The most immediate impacts are being felt across critical supply chain infrastructure. Maritime access through the Strait of Hormuz is largely shutdown to liquefied natural gas (LNG) and non-Iranian tankers, shipping routes are being rerouted, and airspace restrictions are reducing cargo capacity. At the same time, energy market volatility is already feeding through into freight costs, everyday fuel prices and commodity prices. 

For supply chain and procurement leaders, the challenge is clear: geopolitical disruption can quickly cascade into higher landed costs, reduced logistics reliability, and greater risk of supply interruption. If tensions persist, these pressures are likely to intensify. Organisations that act early to understand their exposure and secure alternatives will be best positioned to protect both continuity and cost competitiveness.

Why this conflict matters for global supply chains 

The Strait of Hormuz is one of the world’s most critical maritime chokepoints. Roughly 20% of the world’s oil supply passes through the strait, linking Gulf energy producers with markets across Asia and Europe. Even partial disruption to vessel movement creates immediate uncertainty across shipping and energy markets. 

However, this is not simply an oil story. 

The corridor also supports 20% of the global flows of LNG and other upstream industrial inputs that sit much higher in supply chains than many organisations realise. LNG is particularly important because, unlike oil, it is tied to specific liquefaction and regasification infrastructure and offers far less flexibility when disruption occurs. Many power generation and manufacturing systems, particularly in Asia, depend on consistent LNG supply and cannot easily substitute alternative fuels. 

This makes disruption potentially more acute in specific sectors and regions than oil markets alone would suggest. 

At the same time, shipping disruption in the region is already forcing carriers to reconsider routes. Some vessels are avoiding high-risk corridors and sailing around the Cape of Good Hope rather than using the Suez Canal. This adds roughly 10–14 days to transit times, reducing schedule reliability and increasing working capital requirements as companies carry additional inventory to buffer delays. 

Air cargo is also affected. Airspace restrictions across parts of the Middle East are forcing airlines to reroute aircraft, increasing flight distances and temporarily reducing global cargo capacity. 

Taken together, these developments create a supply chain environment characterised by longer lead times, higher logistics costs, and greater uncertainty across transport networks and commodity markets. 

The supply chain risks emerging 

• Maritime chokepoint disruption: The Strait of Hormuz remains the most significant single point of failure in the region. Even without a full closure, heightened security conditions can restrict vessel movement and create congestion around the corridor. Energy shipments are the most visible risk, but container shipping, bulk commodities, and chemical flows would also be affected if restrictions persist. 
• Shipping rerouting and extended lead times: Major carriers are already adjusting shipping routes to avoid conflict zones. Sailing around southern Africa instead of using the Suez Canal significantly increases transit time and fuel consumption. These longer transit times create additional demand for air shipments, further impacting available supply. For companies reliant on predictable delivery windows, these disruptions may create operational challenges ranging from delayed production schedules to inventory shortages. 
• Rising freight and insurance costs: Operating in high-risk areas requires additional war-risk insurance coverage. Premiums for vessels transiting the Strait of Hormuz have already increased sharply in some cases. Combined with higher fuel costs and reduced vessel availability, these additional charges are likely to feed directly into freight rates and logistics surcharges. 
• Reduced air cargo capacity: Airspace closures across parts of the region are forcing aircraft to avoid conflict zones, increasing flight distances and reducing effective cargo capacity. For industries that rely on rapid delivery of high-value components or critical spare parts, this can quickly translate into service-level risk

The collateral impacts companies may overlook 

While the initial market reaction tends to focus on oil prices and shipping disruption, the broader supply chain impact often appears further upstream. 

Materials such as fertiliser inputs, petrochemicals, industrial chemicals, and industrial gases all depend on energy-intensive production processes and global shipping flows that pass through or depend on the Gulf region. 

These materials sit high in supply chains but feed industries across agriculture, manufacturing, electronics, consumer goods, and healthcare. 

As disruption continues, the challenge goes beyond price volatility. Longer shipping routes, tighter logistics capacity, and higher insurance and fuel costs increase lead times and tie up more capital in goods in transit. Companies must hold more cycle and safety stock as a result, putting pressure on warehousing and cash flow. 

For many organisations this creates significant additional working capital pressure, as companies must carry higher inventories of finished goods containing more expensive critical inputs. 

If disruption lasts for weeks or months rather than days, these pressures can spread across freight, energy, and industrial input markets and, as we saw after Covid, become structural.