{"689444":{"#nid":"689444","#data":{"type":"news","title":"Why the Strait of Hormuz Is More Than an Energy Crisis ","body":[{"value":"\u003Cp\u003ERising oil and gasoline prices have been the center of attention since the closure of the Strait of Hormuz. But that immediate effect tells only part of the story. Because oil and gas underpin production, transportation, and logistics, higher energy costs will gradually move through supply chains \u2014 meaning the most significant economic consequences may not appear for months.\u0026nbsp;\u003C\/p\u003E\u003Cp\u003E\u201cThe effects move slowly and appear in places people do not connect to energy,\u201d said \u003Ca href=\u0022https:\/\/econ.gatech.edu\/people\/person\/tibor-besedes\u0022\u003ETibor Besedes\u003C\/a\u003E, professor in the School of Economics. \u201cOil and natural gas are part of the cost structure for an enormous range of goods.\u201d\u003C\/p\u003E\u003Cp\u003EAbout 20% of global oil and liquefied natural gas flows through the waterway linking the Persian Gulf to world markets. When that flow is constrained, the impact ripples outward across industries most people never associate with an energy crisis.\u003C\/p\u003E\u003Cp\u003E\u201cIn complex supply chains, a disruption in one critical link, even if only briefly, can cascade through the system, well beyond the initial event,\u201d says \u003Ca href=\u0022https:\/\/www.isye.gatech.edu\/users\/pinar-keskinocak\u0022\u003EPinar Keskinocak\u003C\/a\u003E, chair and professor in the H. Milton Stewart School of Industrial and Systems Engineering. \u201cAs delays persist and compound, interconnected systems often take a long time to recover, rebalance, and return to normal.\u201d\u003C\/p\u003E\u003Ch5\u003E\u003Cstrong\u003EPrice Pressures That Arrive Quietly\u003C\/strong\u003E\u003C\/h5\u003E\u003Cp\u003EEarly effects are already visible.\u0026nbsp;\u003C\/p\u003E\u003Cp\u003EJet fuel availability is tightening, and diesel prices are rising across Asia. China has ordered refineries to stop exporting fuel, creating shortages that are increasing shipping costs for U.S. imports, from consumer electronics to pharmaceuticals.\u003C\/p\u003E\u003Cp\u003EThe strait is also a key corridor for naphtha, a feedstock used to produce plastics, packaging, solvents, textiles, and pharmaceutical components. Roughly 85% of Middle Eastern polyethylene exports move through the strait.\u0026nbsp;\u003C\/p\u003E\u003Cp\u003E\u201cConsumers won\u0027t see the effect of this quickly,\u201d Besedes says, \u201cbut the longer the strait is closed, the higher the cost will be of all of these products naphtha is used for.\u201d\u003C\/p\u003E\u003Cp\u003EAluminum is equally exposed.\u0026nbsp;\u003C\/p\u003E\u003Cp\u003E\u201cSmelters require sustained, low-cost energy,\u201d said \u003Ca href=\u0022https:\/\/www.gatech.edu\/expert\/chris-gaffney\u0022\u003EChris Gaffney\u003C\/a\u003E, a professor of the practice in the Stewart School. \u201cThe Middle East accounted for roughly 21% of U.S. unwrought aluminum imports in 2025. When energy prices spike or supply is constrained, capacity is reduced or shut down, and those decisions are difficult and slow to reverse.\u201d\u003C\/p\u003E\u003Cp\u003EFertilizer is one of the clearest examples of delayed inflation. Natural gas is essential for its production, and Persian Gulf states account for one-third of global urea exports and half of global sulfur exports. Urea prices at the New Orleans import hub have already climbed sharply.\u003C\/p\u003E\u003Cp\u003E\u201cWe won\u0027t see the effects quickly, but rather in six to 12 months, depending on the crop and its cycle,\u201d Besedes says. \u201cWithout or with less fertilizer, crop yields will decrease, resulting in higher prices.\u201d\u003C\/p\u003E\u003Ch5\u003E\u003Cstrong\u003EWhy Hormuz Is Different From Other Chokepoints\u003C\/strong\u003E\u003C\/h5\u003E\u003Cp\u003EOn top of all those factors, the strait closure presents a uniquely dangerous vulnerability.\u0026nbsp;\u003C\/p\u003E\u003Cp\u003E\u201cUnlike a port strike or canal blockage, there is no meaningful way to reroute volume,\u201d says Gaffney. \u201cIf it is disrupted, flow is constrained rather than redirected.\u201d Pipeline alternatives replace only a fraction of the 20 million barrels per day that normally transit the strait.\u003C\/p\u003E\u003Cp\u003E\u201cChoke point vulnerability arises when a large portion of flow depends on a route that is hard to substitute,\u201d said \u003Ca href=\u0022https:\/\/www.isye.gatech.edu\/users\/mathieu-dahan\u0022\u003EMathieu Dahan\u003C\/a\u003E, associate professor in the Stewart School. \u201cHormuz has no scalable alternatives with sufficient capacity.\u201d\u0026nbsp;\u003C\/p\u003E\u003Cp\u003E\u003Ca href=\u0022https:\/\/www.isye.gatech.edu\/users\/alan-erera\u0022\u003EAlan Erera\u003C\/a\u003E, senior associate chair in the Stewart School expanded on Dahan\u2019s point, noting that strait disruptions raise costs across manufacturing and distribution.\u003C\/p\u003E\u003Cp\u003E\u201cShips are rerouted onto longer paths, which drives up fuel and labor costs, ties up vessels and containers for longer periods, and ultimately raises inventory costs for shippers because capital is locked up while goods are still in transit,\u201d Erera said.\u003C\/p\u003E\u003Ch5\u003E\u003Cstrong\u003EWhen Geopolitics Meets Global Supply Chains\u003C\/strong\u003E\u003C\/h5\u003E\u003Cp\u003EAdditionally, the strait closure raises the risk of wartime miscalculation.\u0026nbsp;\u003C\/p\u003E\u003Cp\u003E\u201cWe haven\u2019t seen a disruption on this scale since the tanker wars of the late 1980s,\u201d said Larry Rubin, associate professor in the Sam Nunn School of International Affairs. Gulf states\u0027 dependence on the strait constrains both regional actors and U.S. strategy, raising risks around crisis decision-making.\u003C\/p\u003E\u003Cp\u003ERubin also points to a dimension most coverage has missed entirely. \u201cOne thing that has been overlooked by many commentators is the fact that the Iranian people have probably been hit the hardest economically,\u201d he says. \u201cThey were already in a challenging situation. The Iranian economy won\u0027t recover quickly after the war.\u201d\u003C\/p\u003E\u003Ch5\u003E\u003Cstrong\u003EResilience Has a Short Memory\u003C\/strong\u003E\u003C\/h5\u003E\u003Cp\u003EMeanwhile, for the United States, \u201cThe Strategic Petroleum Reserve provides a buffer, and domestic energy production has improved resilience,\u201d says Gaffney. \u201cBut the gap remains between enabling capacity and sustaining resilience. Policy can support infrastructure, but it cannot ensure private sector participants invest in resilience when cost pressures rise.\u201d\u003C\/p\u003E\u003Cp\u003EFor policymakers and industry leaders, the disruption reinforces a familiar pattern. \u0022The supply chain remains optimized for efficiency rather than resilience, in part due to the high investment costs required to build flexibility,\u0022 says Dahan.\u0026nbsp;\u003C\/p\u003E\u003Cp\u003EGaffney added that resilience does improve after disruption, but that \u201cit erodes over time if not actively maintained.\u201d\u003C\/p\u003E\u003Cp\u003EEven if the strait reopens, higher costs and slow restart timelines mean the system will not snap back. Experts suggest that when headlines have moved on from this disruption, it will still be shaping prices across the economy.\u0026nbsp;\u003C\/p\u003E","summary":"","format":"limited_html"}],"field_subtitle":"","field_summary":[{"value":"\u003Cp\u003EThe closure of the Strait of Hormuz is sending shockwaves far beyond rising gas prices, threatening to reshape global supply chains for months or even years to come. With roughly 20% of the world\u0027s oil and liquefied natural gas flowing through this critical chokepoint, disruptions are already rippling across industries from plastics and pharmaceuticals to aluminum, fertilizers, and consumer electronics. Unlike other trade disruptions, the strait offers no scalable rerouting alternatives, forcing longer shipping paths that drive up fuel, labor, and inventory costs worldwide. Experts warn that the most severe economic consequences \u2014 including higher food prices, reduced crop yields, and costlier manufactured goods \u2014 may not surface for six to twelve months, long after headlines have moved on. As global supply chains remain optimized for efficiency over resilience, the Hormuz crisis exposes just how vulnerable interconnected economies are to a single point of failure in international energy trade.\u003C\/p\u003E","format":"limited_html"}],"field_summary_sentence":[{"value":"Georgia Tech experts warn that disruptions at the world\u0027s most critical energy choke point will ripple far beyond oil and gas prices. "}],"uid":"35798","created_gmt":"2026-04-03 15:45:08","changed_gmt":"2026-04-03 17:36:56","author":"Ayana Isles","boilerplate_text":"","field_publication":"","field_article_url":"","location":"Atlanta, GA","dateline":{"date":"2026-04-03T00:00:00-04:00","iso_date":"2026-04-03T00:00:00-04:00","tz":"America\/New_York"},"extras":[],"hg_media":{"679846":{"id":"679846","type":"image","title":"Strait of Hormuz","body":null,"created":"1775237120","gmt_created":"2026-04-03 17:25:20","changed":"1775237252","gmt_changed":"2026-04-03 17:27:32","alt":"Image of a map of Iran, with a magnifying glass over the Strait of Hormuz","file":{"fid":"264054","name":"Strait-Of-Hormuz.jpeg","image_path":"\/sites\/default\/files\/2026\/04\/03\/Strait-Of-Hormuz.jpeg","image_full_path":"http:\/\/hg.gatech.edu\/\/sites\/default\/files\/2026\/04\/03\/Strait-Of-Hormuz.jpeg","mime":"image\/jpeg","size":255785,"path_740":"http:\/\/hg.gatech.edu\/sites\/default\/files\/styles\/740xx_scale\/public\/2026\/04\/03\/Strait-Of-Hormuz.jpeg?itok=98t95NPB"}}},"media_ids":["679846"],"groups":[{"id":"1214","name":"News Room"},{"id":"1188","name":"Research Horizons"}],"categories":[{"id":"144","name":"Energy"},{"id":"194610","name":"National Interests\/National Security"}],"keywords":[{"id":"187915","name":"go-researchnews"},{"id":"167074","name":"Supply Chain"},{"id":"194979","name":"strait of hormuz"},{"id":"8319","name":"iran"},{"id":"194980","name":"iran conflict"}],"core_research_areas":[],"news_room_topics":[{"id":"71901","name":"Society and Culture"}],"event_categories":[],"invited_audience":[],"affiliations":[],"classification":[],"areas_of_expertise":[],"news_and_recent_appearances":[],"phone":[],"contact":[{"value":"\u003Cdiv\u003E\u003Ca href=\u0022mailto:aisles3@gatech.edu\u0022\u003E\u003Cstrong\u003EAyana Isles\u003C\/strong\u003E\u003C\/a\u003E\u003C\/div\u003E\u003Cdiv\u003E\u003Cdiv\u003EGeorgia Institute of Technology\u0026nbsp;\u003C\/div\u003E\u003C\/div\u003E\u003Cdiv\u003EInstitute Communications\u003C\/div\u003E","format":"limited_html"}],"email":[],"slides":[],"orientation":[],"userdata":""}}}