The following piece originally appeared as “Hormuz and the Export of Chaos into Global Supply Chains” on ORF Middle East’s Expert Speaks on April 3, 2026.
Beyond oil and gas, the Middle East is central to other commodities and global supply chains. Industrial chemicals and critical mineral supply chains are two such crucial linkages that integrate the Middle East with the global economy. Disruptions triggered by the Iranian blockade of the Strait of Hormuz have interrupted global efforts at industrial reshoring, data center-led digitization, electrification, and the reinforcement of defense production lines, while also posing risks to global food security.
In addition to its centrality to fertilizer supply chains, the Middle East’s sulphur serves as a necessary feedstock in critical minerals mining. Sulphur is utilized for leaching to remove impurities from low-grade ores of copper, cobalt, nickel, lithium, and uranium. A consistent supply of sulphuric acid is essential for the economical processing of critical minerals at scale. The blockade of the Strait of Hormuz, however, has severely impeded this essential supply chain. Countries such as Indonesia, which requires sulphuric acid for mining that produces 50% of global nickel supply, the Democratic Republic of Congo (DRC), which needs it for mining cobalt and copper, and China, which requires it for lithium extraction and processing, are expected to suffer considerable supply disruptions and losses due to the Hormuz blockade. There is also the challenge of redirecting bulky sulphuric acid cargo, which by its composition is difficult to substitute. The resultant costs of re-routing and attendant insurance premiums across geographies to address the massive supply shock triggered in the Strait would be substantial.
Ironically, the critical minerals caught in the Hormuz disruption also feed into the weapons that are used in prosecuting the conflict itself. These minerals are central to defense sustainment chains, whether through repairing damaged weaponry or enhancing production at scale to meet increased demand for replenishing ammunition reserves and stockpiles. It is perhaps in recognition of this need that the Pentagon is reported to have asked domestic mining companies to increase production of 13 critical minerals one day before the U.S.-Israel coalition launched operations against Iran. The demand for these critical minerals will also drive increased defense manufacturing for use in both Ukraine and in preparation for a Taiwan contingency, following the cessation of hostilities in the Middle East.
Meanwhile, critical minerals such as helium, bromine, and bauxite (aluminum) sourced from the Middle East are also vital to the production of semiconductors and the functioning of data centers. Qatar’s Ras Laffan, which is now expected to be offline for 3-5 years following Iranian strikes, produces one-third of the world’s helium supplies as a byproduct. Helium’s significance to the semiconductor production lies in its properties of heat management and in its role in lithography processing.
Additionally, much of the energy demand of both Taiwan and South Korea is met through Liquefied Natural Gas (LNG) imports from the Middle East, which are now stuck in Hormuz. As a result, these two countries that stand at the heart of global semiconductor manufacturing are simultaneously contending with the loss of energy supplies from the Gulf that power gas-fired facilities while also facing shortages of critical minerals essential to producing the most advanced chips in the world. Asian companies such as Taiwan’s TSMC, SK Hynix, and Samsung KRX are already reported to have suffered substantial market losses due to the disruption in the supply of these minerals.
Electrification is commonly discussed as a response to the vulnerabilities and risk exposure of global oil and gas markets. Batteries, therefore, are expected to be the fulcrum around which this energy transition materializes. An essential raw material for the batteries powering EVs is mixed hydroxide precipitate (MHP). However, the lithium, nickel, and copper supply chains that produce this raw material depend again on the sulphur that is largely sourced from the Middle East and transported through the Strait of Hormuz. Notably, given the composition of these minerals and their role in industries such as battery manufacturing, during supply shortages and bottlenecks, it is price that typically serves as the balancing mechanism, rather than diversification of the form or source of the input.
In addition to the impact of crude oil and LNG shortages, which have a direct bearing on the fuel powering manufacturing industries, the Asian petrochemicals sector is substantially dependent on the region for its feedstock of naphtha, urea, and ammonia. Through the process of cracking, naphtha is used to produce ethylene and propylene, which are raw materials for multiple manufactured products. Nearly 60% of naphtha imports to Asian plants originate in the Middle East. Furthermore, the conflict has led to several Gulf smelters ceasing operations, creating an aluminum supply crunch, which alongside the limestone bottlenecks significantly affects steel and related industrial production cycles globally. Similarly, methanol supply shortages result in solvent shortages that impact the pharmaceutical industry as well as the production of biodiesels and formaldehyde, which are used in the production of industrial adhesives and resins. While the current supply chain bottlenecks have affected the functioning of most manufacturing units in Asia, further disruptions are likely to lead to shutdowns and plant curtailments, resulting in substantial losses.
The ramifications of Iran's blockade of the Strait of Hormuz on supply chains spans food security, economic security, environmental security, and national security. Many of these global disruptions are likely to persist beyond the cessation of present day hostilities.
Cauvery Ganapathy is a Fellow of the Climate and Energy program at the Observer Research Foundation, Middle East.