The Last Ship to Reach Its Destination

The Situation Is Getting Worse

The number of ships transiting the strait has dropped into the single digits—a stark contrast to the 60–80+ vessels per day prior to the conflict. Traffic out of the strait is down 97% since hostilities began, and the trajectory remains negative.

On March 18, Israel struck Iran’s South Pars natural gas field—one of the most strategically important energy assets in the region. The response was immediate. Iran signaled potential retaliation against allied infrastructure across Qatar, Saudi Arabia, Kuwait, and Oman.

President Donald Trump has called for a halt to further strikes on Iranian infrastructure, attempting to distance the United States from Israel’s actions. Iran, meanwhile, has warned it will exercise zero restraint if additional assets are targeted, even as it frames the conflict as one that should remain between military forces.

The implication for markets is clear: the strait is no longer functioning as an open transit corridor.

Traffic is still moving—but only selectively, and increasingly on Iran’s terms.

On March 14, there were zero recorded crossings in either direction. On March 16, with AIS tracking enabled, eight non-Iranian vessels were observed hugging the Iranian coastline and transiting through Iranian territorial waters. These ships are believed to have originated from Imam Khomeini Port, though cargo details remain unclear.

Iran is effectively operating the strait as a controlled checkpoint—allowing passage to allied-flagged vessels, including Chinese, Indian, and Pakistani ships, while Western-linked commercial traffic remains largely frozen.

The Gap Is Just Beginning to Show

Markets reacted quickly—but not yet fully.

The initial shock triggered a sharp price spike, followed by a partial pullback as markets attempted to recalibrate. At a glance, this looked like stabilization. In reality, the system had not yet absorbed the physical disruption.

Pre-conflict inventories across many commodity chemicals and raw materials were relatively strong, and pricing had been trending downward since Q4 2023. That cushion delayed the impact. In some cases, producers were able to push through price increases before any meaningful inventory drawdown had begun.

That window is now closing.

Transit times from the Persian Gulf illustrate the lag:

• Middle East → East Asia (Japan, Korea, China): 15–25 days
• Middle East → Europe (via Suez): 20–30 days
• Middle East → U.S. Gulf Coast: 35–45 days

Those timelines define the next phase of this disruption. The supply gap is no longer theoretical—it is arriving now, as the last pre-conflict shipments reach their destinations.

At the same time, supply-side pressure is building. Companies are moving quickly to preserve inventory, with force majeure (FM) declarations accelerating. As of March 19, an estimated 37 companies—primarily in the Middle East and Asia—have declared FM across key product chains, including olefins and polymers, aromatics, chlor-alkali and vinyl chains, glycols, and oxo-alcohols, along with downstream products such as VAM, ABS, polyurethanes, polyols, nylon, and urea.

How Long Can We Hang On?

This is the inflection point.

As the final shipments arrive, imports of crude and naphtha are expected to decline sharply. Fuel demand will take priority over chemical feedstocks, pushing energy prices higher across the region. Naphtha, in particular, is likely to remain in gasoline blending pools, tightening availability for petrochemical production.

The implication: chemical markets are about to compete directly with fuel markets for the same molecules.

Trade flows will shift—heavily—toward Asia. That shift will not be frictionless. Logistics constraints, vessel availability, and regional capacity limitations will all come under pressure simultaneously.

Markets will continue to search for signals—operating rates, inventory levels, spot pricing—but in several product segments, directionally, the outcome is already becoming clear: price increases are likely to be both rapid and pronounced.

ResourceWise will continue to closely track regional operating rates. In our view, price volatility will correlate directly with inventory drawdowns. The higher downstream operating rates remain, the faster inventories will deplete—and the more aggressively price pressure will build.