Moneycontrol Pro Panorama | Trade turbulence

This is not a localised conflict.

Dear Reader,

When the first missiles struck Iranian soil, the shockwaves were felt not only across the Middle-East, but also in financial trading rooms around the world. Global equity markets responded as they do to systemic shocks: What began as ripples quickly turned into massive tidal waves impacting equities worldwide.

What the markets understood immediately was that this was not a localised conflict. It was a direct hit to the circulatory system of global trade.

The Strait of Hormuz, that narrow ribbon of water between Iran and Oman, barely 33 kilometres wide at its tightest point, carries roughly 20 percent of the world's crude oil and a fifth of global liquefied natural gas. Within days of the conflict's outbreak, Iran had effectively weaponised this chokepoint. Six tanker vessels came under attack in or near the strait in a single week.

Insurers began cancelling war risk coverage for ships attempting passage. Vessel tracking data show that approximately 500 ships are anchored in open Gulf waters, immobile, their captains unwilling to risk transit.

The impact on oil markets was immediate and severe. Goldman Sachs earlier had warned that prices could climb above $100 per barrel if shipping disruptions continued; analysts at JP Morgan noted that the market had shifted from pricing "pure geopolitical risk" to grappling with tangible operational disruptions.

European natural gas futures soared by more than 40 percent. Qatar, which supplies 20 percent of global LNG, declared force majeure after Iranian drone attacks on its Ras Laffan facilities, warning that it could take at least a month to restore normal production.

Saudi Aramco's Ras Tanura refinery — one of the world's largest crude export terminals — shut its gates following attacks. Storage facilities across the Gulf began filling rapidly, forcing oilfields in Iraq and Kuwait to curtail production. The UAE was widely expected to follow.

The knock-on effects for container shipping were swift and structurally familiar, echoing the Red Sea crisis of 2023-24 but with considerably higher stakes. An estimated 135,000 TEUs (Twenty-foot Equivalent Unit), worth nearly $4 billion in cargo, were effectively stranded in the region. Major carriers moved quickly to limit their exposure.

Hapag-Lloyd and MSC suspended bookings to and from all Persian Gulf ports. CMA CGM stopped accepting bookings entirely for the region and introduced an emergency surcharge of $3,000 per forty-foot equivalent unit. Maersk halted reefer bookings to the entire region and suspended bookings from India to the Gulf.

Freightos data showed rates on the Shanghai-to-Jebel Ali corridor spiked from $1,800 per FEU (forty-foot equivalent unit) on March 1 to over $4,000 within 72 hours. Carriers still sailing diverted containers to transhipment hubs in Singapore, Malaysia and Sri Lanka — ports that had barely recovered from the congestion caused by the Red Sea rerouting.

The consequences were felt in unexpected places. In India, close to 3,000 containers carrying 60,000 metric tonnes of basmati rice sat immobile at various ports, going nowhere. The Indian Rice Exporters Federation urged members to avoid entering new cost, insurance, and freight contracts for Gulf-bound shipments. The Middle-East — specifically Saudi Arabia, Iran, Iraq, the UAE and Yemen — accounts for nearly half of India's basmati rice exports.

India also faced a looming shortage of gold and rough diamonds, as UAE airspace closures disrupted shipments through Dubai, which handles an estimated 50-60 percent of India's annual gold imports and is its largest supplier of rough diamonds.

Aviation suffered a different but equally dramatic collapse. Dubai International Airport — the world's busiest hub for international passenger traffic — suspended operations indefinitely following strikes on the Jebel Ali port area. Abu Dhabi's airport sustained fatal damage; Kuwait International's passenger terminal was hit by drones; Qatar suspended all air navigation and grounded the Qatar Airways fleet.

Unlike isolated incidents, every major Gulf aviation hub was struck simultaneously. The shutdown during Ramadan season was expected to inflict losses of $40 billion on the regional aviation sector alone. For Emirates and Qatar Airways — national flagships and among the most profitable airlines on earth — the impact is expected to structurally change the companies, which may now look to diversify their routes.

For cargo insurers and freight forwarders, the legal and financial complexities of the crisis are daunting and could persist for years, with protracted legal battles and mounting costs. The distinction between war risk and standard cargo cover has enormous practical consequences. Forwarding charges arising from voyage terminations may not be recoverable under standard marine cargo policies where war is an excluded peril.

Carriers issuing force majeure notices and terminating voyages mid-journey created a cascade of contractual disputes. Freight forwarders caught between carrier surcharges and fixed-price customer contracts faced potentially ruinous exposure. Courts, when eventually asked to rule, would scrutinise force majeure clauses strictly, mindful of carriers' ongoing duty of care for cargo in their custody.

In short, even if the conflict ends within weeks, shipping disruptions would still last for a month or more. Rerouting vessels via the Cape of Good Hope adds 10-14 days to each leg of the journey, and the resulting delays are not quickly resolved. If hostilities continued beyond four weeks, Brent crude could approach $120 to $150 per barrel. A sustained Hormuz closure, analysts warned, could push prices toward $200 — a level considered near-certain to trigger a global recession.

Central banks, which had been cautiously signalling rate cuts, would be forced to pause or reverse course as inflation reignited. The world in March 2026 was confronting what analysts called a "short-term shock, long-term transmission" event - a conflict that might last days but whose economic aftershocks would last much longer. Even if the war ends soon, it could take years for shipping schedules, insurance models, supply chains, and commodity prices to fully return to normal.

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