The Banking Executive Magazine - May 2026 Issue - New

Impact of US-Iran War Ranking of trade routes most affected to least affected by the US-Iran con- flict in 2026 is as follows: 1. Strait of Hormuz: Normally carrying about 20% of global oil and Liquified natural gas (LNG) shipments, its closure has caused the largest energy sup- ply shock in modern history. Gulf exporters and major importers in Asia and Europe are directly im- pacted. 2. Red Sea and Suez Canal Corri- dor: With Hormuz blocked, this route has become overloaded. It is facing heavy congestion and rerouting pressure, while also being vulnerable to spillover in- stability from the conflict. 3. Bab el-Mandeb Strait: As the gateway between the Red Sea and the Indian Ocean, it has seen heightened security risks, piracy threats, and potential blockages. Its strategic impor- tance makes it highly exposed to escalation. 4. Cape of Good Hope: Serving as the main alternative detour around Africa, this route is experiencing longer transit times, higher costs, and container short- ages. While not directly in the conflict zone, it is heavily bur- dened by rerouted traffic. 5. Mediterranean Ports: Ports such as Rotterdam, Piraeus, and Genoa are indirectly af- fected, with reduced throughput of Gulf-origin goods, rising costs, and delays in supply chains. Their disruption is secondary compared to the chokepoints closer to the Gulf. The Strait of Hormuz is the most se- verely affected, while Mediterranean ports experience the least direct dis- ruption but still suffer from the global ripple effects. GOODS AND SERVICES MOST AFFECTED BY US-IRAN CONFLICT IN 2026 The US-Iran conflict in 2026 most se- verely affected energy commodities (oil and liquefied natural gas), ship- ping and logistics services, and downstream industries like manufac- turing and food supply. The closure of the Strait of Hormuz caused the largest energy supply shock in mod- ern history, with ripple effects across transport, consumer goods, and fi- nancial services. • Energy flows through Hormuz and Malacca were the most severely hit, causing cascading effects across shipping, manufacturing, food, and pharmaceuticals. • Logistics services (shipping, insur- ance, port handling) became cost- lier and slower due to rerouting around the Cape of Good Hope. • Agriculture and consumer goods faced inflationary pressures, while pharmaceuticals suffered from air cargo delays. • Financial services absorbed the shock through higher premiums, currency volatility, and inflationary spillovers. ECONOMIC SECTORS AFFECTED BY US-IRAN WAR IN 2026 Energy is the most vulnerable sector because of its reliance on choke- points like the Strait of Hormuz, while agriculture and food are af- fected but less immediately critical compared to energy and manufactur- ing. Pharmaceuticals, though smaller the BANKING EXECUTIVE 12 ISSUE 209 MAY 2026