Executive summary

The effective closure of the Strait of Hormuz since late February 2026 — triggered by U.S. and Israeli military operations against Iran — represents the most consequential disruption to the global energy supply since the 1970s oil crisis. Approximately 20 million barrels of oil pass through the strait per day, roughly 20% of global seaborne oil trade, as well as 20% of the world’s liquefied natural gas (LNG) and one-third of global fertilizer shipments.

While the United States produces more domestic oil than any nation, American businesses are not insulated. Oil trades in a global market: when supply is removed anywhere, prices rise everywhere. Brent crude surpassed $126 per barrel at its peak in March 2026, gasoline prices have risen more than 50 cents per gallon, and freight, fertilizer, and industrial input markets are repricing in real time.

This is not a scenario to model. It is the current operating environment. Businesses that move earliest to quantify, document, and mitigate their exposure will be best positioned to navigate what is likely a multi-quarter dislocation. CohnReznick’s Risk Advisory team is prepared to support clients across every stage of that response.

The macroeconomic architecture of the shock

The Federal Reserve Bank of Dallas(Opens a new window)(Opens a new window) has modeled that removing close to 20% of global oil supply from the market is expected to raise average WTI prices to approximately $98 per barrel and reduce global real GDP growth by an annualized 2.9 percentage points in Q2 2026. Goldman Sachs has revised U.S. inflation forecasts upward, and the broader consensus among forecasters points to a stagflationary drag on the U.S. economy — higher prices and slower growth arriving simultaneously.

Stagflation is the most difficult environment for business planning because traditional hedges work against each other. Raising prices to offset input cost inflation risks demand destruction. Cutting costs risks operational vulnerability. The only durable response is a rigorous, evidence-based assessment of exposure, followed by targeted action.

Key macro transmission channels

• Energy prices: Brent crude peaked above $126/bbl; domestic gasoline up 50+ cents/gallon
• Freight and logistics: major carriers (Maersk, Hapag-Lloyd) have suspended Middle East routes; rerouting via Cape of Good Hope adds 10-14 days and significant cost
• Inflation: CPI pressure is broadening beyond energy into food, industrials, and manufactured goods
• Financial conditions: war-risk insurance premiums have surged; trade finance costs are rising; currency volatility is elevated across EM and allied trading partners
• Supply confidence: Iraq and Kuwait have curtailed oil production as storage fills with no export outlet — the disruption is structural, not merely logistical
• Permanent consumer price re-basing: over 90% of manufactured goods contain oil-derived inputs; even a temporary supply shock resets the cost floor permanently as producers reprice to protect margins, making this inflationary episode structurally different from prior demand-side cycles

Next steps

The window for proactive positioning is narrow. Every week that passes without a clear-eyed assessment of exposure is a week of margin erosion, missed contractual protections, and reactive decision-making. We recommend the following immediate actions for all clients:

• Schedule a 60-minute executive briefing with your advisory team to map current exposure against the sector frameworks outlined in this document
• Convene your procurement, treasury, and legal teams to review supplier contracts, force majeure clauses, and insurance coverage before the next renewal or repricing cycle
• Commission a rapid exposure diagnostic if your business has material dependence on energy, fertilizer, aluminum, LNG, or Gulf-origin freight lanes

Industry-level microeconomic impacts

The table below summarizes primary exposure and urgency rating by sector. Detailed analysis follows.

Energy & utilities 

The most immediate exposure sits in this sector. With Brent crude at peak levels not seen since 2022, E&P companies benefit on the revenue side while refiners, utilities, and power generators face acute margin compression. Natural gas markets face parallel pressure: Qatar, the world’s second-largest LNG exporter, preemptively paused LNG production, and roughly 20% of global LNG supply transits the strait. 

Key next steps: Utilities with gas-fired generation and long-term supply contracts should immediately review take-or-pay obligations and force majeure provisions.

Agriculture & food

This sector carries arguably the broadest societal risk. Approximately one-third of global fertilizer trade transits the Strait of Hormuz, including critical nitrogen exports. New Orleans urea prices have already risen from $475 to $680 per metric ton — a 43% spike — with the disruption arriving precisely at the spring planting window for Midwest corn and soy.

Key next steps: Agribusiness clients should immediately model input cost scenarios at current, 25%-elevated, and 50%-elevated fertilizer price levels and evaluate purchase commitments and hedging positions. Downstream food manufacturers and grocery retailers should anticipate meaningful COGS pressure in H2 2026.

Manufacturing & industrials

The Middle East accounted for approximately 21% of global aluminum production in 2025, making aluminum one of the largest non-petroleum commercial casualties of the closure. Petrochemical inputs, plastics, rubber, steel, and electronics components are similarly exposed.

Key next steps: For manufacturers with Gulf-origin inputs, procurement teams must immediately evaluate single-source dependencies and model cost pass-through scenarios against existing customer contracts. Companies with fixed-price sales agreements and variable input costs face the sharpest margin risk.

Pharmaceuticals & healthcare

Generic drug supply chains are under significant stress. A substantial share of active pharmaceutical ingredients (APIs) are produced in or transited through the region, and the FDA has flagged supply continuity concerns. Healthcare-adjacent manufacturers of medical devices and equipment — which rely on petrochemical-derived plastics and electronics — face parallel input cost pressure.

Key next steps: Advisory clients should stress-test supplier concentration, evaluate domestic and allied-nation substitution options, and communicate proactively with customers and regulators.
Logistics, transportation & retail

Logistics, transportation & retail

The freight channel is severely disrupted at both the ocean and inland levels. With tanker traffic at a near halt and major carriers having suspended Middle East routes, vessels are rerouting around the Cape of Good Hope, adding transit time and cost. The real pressure at domestic ports typically hits within 2–5 weeks as diverted containers arrive in clusters, terminal congestion rises, and drayage demand outpaces chassis availability.

Key next steps: Retailers carrying lean inventories — particularly in electronics, apparel, and home goods with Asian or Gulf-origin supply chains — are most exposed. Safety stock assumptions built in a low-volatility environment are no longer valid and need revised.

Financial services & insurance

Insurance has become a primary enforcement mechanism for geopolitical risk. War-risk premiums on tankers reached a six-year high ahead of the conflict and have continued to escalate; on March 5, 2026, war-risk coverage was effectively pulled, making transit economically unviable for most commercial operators.

Key next steps: For financial services clients, credit portfolios with concentrated exposure to energy producers, commodities traders, logistics companies, or emerging market counterparties require immediate stress review. FX desks face elevated volatility in the yen, rupee, South Korean won, and other currencies of nations with acute Hormuz dependency.

Tangential lagging impacts: The permanent price floor problem

The immediate commodity and freight impacts documented above are the first-order effects of the Hormuz closure. Equally significant — and less widely modeled — are the tangential lagging impacts that will persist long after the strait reopens. Chief among these is the permanent consumer price re-basing driven by the oil dependency embedded throughout the manufactured goods economy.

The oil dependency of manufactured goods. More than 90% of all manufactured goods contain petroleum-derived inputs at some stage of production — from synthetic fibers in clothing and plastic casings in electronics, to adhesives, packaging, lubricants, and pharmaceuticals. This creates a critical asymmetry: oil price shocks transmit forward into consumer prices rapidly, but the reverse does not hold. When oil prices eventually fall, manufacturers do not reset consumer prices downward at equivalent speed or magnitude. The result is a ratchet effect: each significant oil price spike permanently raises the consumer price floor for a broad basket of manufactured goods.

Why this disruption Is structurally different. The 2026 Hormuz closure differs from prior oil shocks in a way that amplifies the lagging impact: it is simultaneously a supply shock, a logistics shock, and an insurance market failure. Each layer compounds repricing. A manufacturer facing higher petrochemical input costs, longer lead times, elevated freight rates, and war-risk surcharges does not experience these as temporary surcharges — they are absorbed into revised long-term cost structures, supplier contracts, and product pricing architectures. Once prices are reset upward at scale, competitive dynamics and sticky-price behavior across industries mean consumers bear those increases as a new baseline, not a temporary premium.

Implications for advisory clients. The lagging price re-basing has three direct advisory implications: 

1. Revenue models that assume post-shock price normalization are likely overstated — multi-year financial projections should assume a structurally higher COGS baseline.
2. Consumer-facing businesses should anticipate demand elasticity effects as households absorb broader price increases across categories simultaneously, compressing discretionary spend.
3. Companies that can contractually lock in input costs or lock out price-reset clauses in customer contracts during the disruption period will carry a durable margin advantage over competitors who cannot. 

CohnReznick’s advisory team can model these lagging scenarios alongside the immediate exposure diagnostics to provide clients with a complete forward cost picture.

How CohnReznick Risk Advisory can help

CohnReznick’s Risk Advisory practice brings together deep sector expertise, quantitative modeling capabilities, and hands-on transaction advisory experience to help clients translate macro disruption into targeted, actionable responses. We are not a firm that produces frameworks — we produce deliverables that drive decisions. We support clients across the following advisory areas to assess exposure and respond effectively.

• Supply chain risk assessment: Identify single-source dependencies; map exposure to Hormuz-transiting inputs
• Commodity and input cost modeling: Scenario-based P&L stress tests under $100, $120, $140/bbl oil price assumptions
• Working capital and liquidity advisory: Re-forecast cash needs under elevated input costs; covenant compliance review
• Contract and pass-through analysis: Audit force majeure clauses; quantify contractual cost-recovery rights
• Insurance and risk transfer review: Assess war-risk, cargo, and business interruption coverage adequacy
• Procurement strategy: Identify alternative supplier corridors; support renegotiation of purchase terms
• Regulatory and sanctions monitoring: Track evolving U.S. sanctions and export controls affecting supply chains
• M&A / Distressed asset advisory: Identify acquisition targets stressed by supply disruption; valuation support
• Lagging impact & permanent price floor modeling: Multi-year COGS re-basing analysis; consumer demand elasticity modeling; contract lock-in strategy to preserve margin advantage post-disruption

Our approach

We work in a structured, three-phase engagement model calibrated to the urgency of this environment:

• Phase 1 — Rapid Exposure Diagnostic (1-2 weeks): A targeted assessment of commodity and freight cost exposure, supplier concentration risk, working capital adequacy, and contractual pass-through rights. Output: an executive-ready risk map with quantified exposure ranges.
  
• Phase 2 — Scenario Modeling & Strategy (2-4 weeks): Scenario-based financial modeling across oil price and supply disruption assumptions; identification of mitigation levers by cost category; procurement and hedging strategy recommendations.
• Phase 3 — Ongoing Advisory & Monitoring: Continuous monitoring of macro conditions, insurance markets, and regulatory developments; periodic model refreshes; support for board and lender communications.

Across practice areas, our Risk Advisory team coordinates with CohnReznick’s Transaction Advisory, Restructuring, Tax, and Audit services to provide integrated support where the disruption touches multiple dimensions of a client’s business — which, in this environment, it almost always does.