Escalating tensions between the United States and Iran are raising concerns about potential disruptions to global trade routes, particularly the Strait of Hormuz, a critical chokepoint for energy shipments. We spoke with Sarah Jinhui Wu, a Professor of Operations Management at Fordham University’s Gabelli School of Business, about how instability in the region could affect shipping networks, energy prices, and supply chains worldwide.
Supply Chain 24/7: With the U.S. and Iran now in open conflict, how is that uncertainty already showing up in global supply chains?
Sarah Jinhui Wu: Uncertainty first shows up as supply chain variability. Variability is the “enemy” of a lean system. For instance, shipping lead times become less reliable as carriers slow steam, reroute, or even pause sailings; schedules become harder to trust. More buffer is needed to hedge risk, and firms shift from cost optimization to continuity. You may see more expedited moves, higher safety stocks on critical SKUs, and more multi-sourcing, especially for energy- and chemical-dependent inputs.
SC247: We’re seeing oil prices climb and energy markets wobble. How does conflict in the Middle East translate into higher costs for fuel and freight?
Wu: There are two compounding channels that lead to higher costs for fuel and freight. First, conflict around the Gulf threatens supply continuity and shipment schedules, creating an energy price shock that oil and gas markets price in as a reflection of scarcity and risk. The Strait of Hormuz is a major chokepoint—about 20 million barrels/day (roughly 20% of global petroleum liquids consumption) move through it, so even a partial disruption can change price expectations quickly. Second, freight gets pricier due to the logistics cost shock. Typically, carriers apply emergency/conflict surcharges, which quickly feed into shipper invoices. Rerouting adds distance and time, tying up vessels/aircraft longer, reducing effective capacity, and pushing rates up.
SC247: Beyond energy, what kinds of everyday products or industries are starting to feel the effects of this conflict?
Wu: Energy is an input to the production of almost everything, but some sectors are more dependent on energy than others. For instance, plastics, packaging, and consumer goods that rely on petrochemical feedstocks; Food and groceries can be affected by rising fertilizer costs and higher diesel for farming, processing, and trucking. Manufacturing with energy-intensive processes (cement, glass, metals) where energy is a large share of unit cost. Airline operations are heavily affected by the escalating conflict between the U.S., Israel, and Iran. Thousands of flights have been canceled, key Gulf airspace is closed, and major hubs like Dubai and Doha are facing massive disruptions, with airlines redirecting routes and suspending service to the region.
SC247: Some trade routes in the Gulf, including the Strait of Hormuz, have been disrupted or avoided by carriers. What kinds of problems does that create for shipping and logistics?
Wu: When carriers avoid a chokepoint, you don’t just get delays, you experience network-level side effects (cascading effect), such as longer transit times & missed connections; capacity squeeze—longer routes mean the same fleet completes fewer voyages per month, so rates rise even for lanes not directly in the Gulf; equipment imbalance—containers and chassis end up in the “wrong” places, causing localized shortages and extra repositioning cost. Insurance companies may charge higher premiums, impose tighter terms, and even refuse to cover voyages, leading to last-minute carrier switches.
SC247: How quickly could consumers in the U.S. feel this conflict in their wallets, whether at the pump or on store shelves?
Wu: Gas prices react quickly, potentially within days. Fuel markets reprice quickly when risks to crude oil supply rise and refiners and wholesalers change their expectations.
Goods on the shelf react on the inventory cycle, usually weeks to a couple of months, depending on how much inventory retailers already hold, whether the product is domestic vs imported, and whether freight is locked in via contracts (which delays pass-through) or bought spot (which passes through faster).
SC247: Looking ahead, what’s the biggest risk supply chain leaders should be watching if this conflict drags on or gets worse
Wu: This is what supply chain leaders should watch most closely:
- Duration/degree of Hormuz disruption (even partial) because it’s a high-leverage node for oil and Liquefied Natural Gas flows
- Insurance availability and war-risk pricing, which can become the binding constraint even before physical capacity does.
- Contagion to other lanes (rate spikes, equipment shortages, port bunching) that spreads inflation beyond energy.
The core issue isn’t just higher short-term costs; it’s variability. When reliability drops, every supply chain has to buy resilience, and resilience requires redundancy, buffers, or flexibility, which increases cost.
Sarah Jinhui Wu is a Professor of Operations Management at Fordham University
