Inflated Economy

Industrial Materials Face Price Pressures

As Iran continues to block most shipments through the Strait of Hormuz, the world is bracing for a return of high inflation. The Strait of Hormuz is a narrow waterway linking the Persian Gulf to the open ocean. At normal times, about 20 percent of the world’s oil and liquefied natural gas (LNG) passes through it.

But energy is only one part of the story. The strait is also a crucial shipping route to helium, bromine, and fertilizer ingredients. As prices of these materials spike, the impact is felt across the global economy. 

The closure of the Strait is a so-called grey swan: a high-impact, low-probability event that is predictable yet often neglected. This is different from a more famous black swan event, which almost no one sees coming.

Why Food Prices Could Balloon

Modern farming depends on chemical fertilizers and pesticides. Many of these chemicals are produced in the Gulf region and shipped through the Strait of Hormuz:

• Half of the world’s urea, the most used nitrogen-based fertilizer in the world
• Almost a third of the world's ammonia
• More than 40% of the global sulfur supply

Farmers also face higher wholesale gas costs, impacting the heating of greenhouses. The oil shock makes food transport more expensive. The price pressures will likely creep into grocery bills over the coming months.

Miners Hit by Sulfur Squeeze

Sulfur is a byproduct of oil and gas refining, which is why so much of it comes from the Gulf. It can be turned into sulfuric acid, a crucial chemical in metal processing.

Why this matters:

• Miners use acid‑based extraction for metals like copper, uranium, and nickel
• Many producers rely on Gulf sulfur imports
• Higher costs can show up months later in metal prices

Mining can continue for a while using stockpiles, but once those run down, production gets more expensive. There’s already a supply crunch on copper, a key metal in electric vehicles, power grid upgrades, and data centers.

Chips Need More Than Silicon

While chips aren’t widely produced in the Gulf Region, the war threatens the tech industry, too.

This is because chip manufacturers need:

• Helium to cool equipment and prevent reactions
• Sulphuric acid to clean silicon wafers
• Bromine to precisely etch chip patterns. Much of it comes from the Dead Sea.

About a fifth of the world’s helium is used by the semiconductor companies. Other uses include cooling superconducting magnets in MRI machines and, of course, party balloons. More than a third of the world’s helium is supplied by Qatar as a byproduct of LNG.

How Iran Controls the Strait

The Strait of Hormuz has never been closed this thoroughly, although the route was severely disrupted during the 1980s “Tanker War” and later regional crises.

The tools Iran is using:

• Sea mines that are hard to detect
• Missiles and drones from shore
• Small fast boats targeting tankers

All these have sent insurance costs skyrocketing, making it even less likely for the vessels to attempt the journey.