Mapping the Damage from the Iran War I: The Timeline of the Supply Chain Shock
Which commodities run out first, which industries stop, and how much time is left.
The war with Iran has now been running for a month. Most investors know the Strait of Hormuz matters. Many already understand that the disruption goes well beyond crude oil, into diesel, LNG, petrochemicals, fertilizer, and further.
But almost nobody has mapped the sequence.
That is what makes this crisis so much harder to position for than a simple oil shock. The damage does not arrive all at once. It arrives commodity by commodity, each on its own timeline, each with its own reserve cushion, and each hitting a different part of the industrial economy at a different moment. Some markets are already in crisis. Others still have weeks or months of buffer. And the order in which they break determines which industries take the damage first, which ones get hit by second-order effects, and where the stress is still building beneath the surface.
That is what we tried to map. We went commodity by commodity, looked at the inventory cushion, the replacement options, and the realistic timeline before each one breaks. Not to answer whether this crisis is bad. Everyone already knows it is bad.
The question is when each part of the system takes its punch,
and what that sequence means for the industries and economies sitting downstream.
Even if peace came tomorrow, this mapping would still matter. Some of these markets can heal quickly. Others are already carrying damage that will take years to repair.
The first step to outperformance is to see the full map before the market does. That is what this piece is for.
Why Oil Is Our Smallest Problem
Global oil demand is roughly 105 million barrels per day. Under normal conditions, about 20 million barrels per day move through the Strait of Hormuz, including roughly 15 million barrels per day of crude and condensate. At first glance, that sounds like an impossible shock to absorb.
But crude is the one part of this crisis where the world still appears to have a way through.
The first reason is bypass capacity. Saudi Arabia can reroute about 3.5 to 4.0 million barrels per day through Yanbu, the UAE can add about 0.7 million through Fujairah, and Iraq can contribute around 0.3 million through Kirkuk-Ceyhan. So if the crude disruption is roughly 13 to 15 million barrels per day, the pipelines bring that down to about 8 to 10.5 million.
Then comes demand adjustment. The IEA’s emergency measures, forced conservation, policy pressure, and price elasticity combined can realistically reduce demand by around 4 million barrels per day. Add another 0.5 from shale, Venezuela, and other marginal sources, and the residual gap falls to about 3 to 5 million barrels per day.
At this point, you could reasonably think: maybe there really is a bridge.
And for a while, there is.
That final gap can be covered from strategic reserves. A 400 million barrel release buys roughly 80 to 100 days. Push the drawdown to 600 million barrels, and the window extends toward late August. This is why oil is our smallest problem. Not because it is small, but because crude is the only major Hormuz-exposed market where the world still has pipelines, reserves, and time.
But this apparent escape route has a deadline.
Even the 600 million barrel scenario only works if Hormuz is functioning again by the end of July. Reopening is not the same as normalization. Restoring traffic of more than 100 ships per day takes another 4 to 8 weeks. So if the Strait is still not meaningfully back by late July, the question stops being how high oil prices can go. The question becomes whether there will be enough oil.
And if oil is the smallest problem on the board, August already tells you how dangerous the rest of the map could become.
The Real Killer: Diesel Shortages
Most investors think about energy through crude oil. But the real economic damage begins with diesel. Because diesel is the fuel of the physical economy. Trucks, freight, construction machinery, farms, mining: a modern economy can survive expensive oil for a while. It struggles much more when diesel becomes scarce.
This is the distinction that matters most. With crude oil, the first question is usually price. With diesel, the more important question is availability. If diesel tightens enough, this stops being a story about what consumers pay at the pump. It becomes a story about whether goods can still move through the system at the same speed and at the same cost.
Crude has emergency bridges: bypass pipelines, massive strategic reserves, and a longer time buffer. Diesel has none of that. The strategic reserves sitting in government caverns are overwhelmingly crude, not refined products. And crude in storage is not diesel in a truck tank. It still has to be refined, and that takes time the system may not have.
Now let me walk you through the three layers of the diesel shock:
The first layer is the direct export loss at Hormuz. Gulf producers exported roughly 3.3 million barrels per day of refined products in 2025, plus another 1.5 million barrels per day of LPG. According to Vortexa, diesel and gasoil account for roughly 1.5 to 2.0 million of the total lost product flow. None of it has a real alternative route.
The second layer is refinery disruption inside the region. More than 3 million barrels per day of Gulf refining capacity has already been shut, damaged, or forced to cut runs. Ruwais in the UAE is offline. Bahrain’s Bapco-Sitra is under force majeure. Saudi Ras Tanura has stopped fuel refinement. Kuwait’s three refineries have cut processing as storage fills up. Once you include the diesel portion of those outages, another 1.0 to 1.5 million barrels per day disappears.
The third layer hits outside the Gulf. Asian refineries are designed around medium and heavy sour crude from the Middle East. Replacement barrels from the US or West Africa are lighter and sweeter, which means lower middle-distillate yields. In simple terms: refineries get less diesel out of each barrel. Wood Mackenzie estimates Asian crude run cuts could still reach about 2.1 million barrels per day even with SPR access, while Atlantic Basin refiners may add only about 600,000 barrels per day.
Put it together and the balance sheet becomes ugly fast. Start with 29 to 30 million barrels per day of global diesel demand. Subtract 1.5 to 2.0 million from blocked exports, another 1.0 to 1.5 million from refinery shutdowns, another 0.8 to 1.0 million from forced Asian refinery cuts. Add back 0.3 to 0.6 million from higher Atlantic Basin runs. You are left with a net diesel gap of roughly 2.5 to 4.0 million barrels per day, or around 8% to 13% of global demand.
At that point investors will ask the same question they asked about crude: can reserves bridge it?
This is where the escape route disappears. Diesel-specific reserves are only about 160 to 250 million barrels globally, versus roughly 1,250 million barrels of government-held crude reserves. In the conservative case, that buffer lasts about 40 days. In the base case, roughly 67 days. Even in the optimistic case, only about 100 days. Crude buys the world months. Diesel buys it weeks.
Europe is where this becomes even more dangerous. The continent has now lost its two biggest diesel supply sources in sequence: first Russia after the 2023 sanctions, then the Middle East after the 2026 war. Before the conflict, about 30% of Europe’s diesel imports and roughly half of its jet fuel imports came from the Middle East.
And this is why diesel is the real macro risk. Around 70% of US freight moves by truck, and trucks run on diesel. When diesel becomes scarce, it flows into food, construction, industrial inputs, and freight costs across the economy. This is where the supply shock starts entering the real world.
LNG: the Crisis is Already Here
If crude has a fragile safety net, and diesel has a thin one, LNG has none at all.
There is no bypass pipeline. There is no strategic reserve system. There is no quick substitute. And in this case, the problem is no longer just blockade. Part of the infrastructure itself has already been damaged.
Qatar exported about 81 million tonnes of LNG in 2025, roughly 20% of global LNG trade. Nearly all of Qatar’s and the UAE’s LNG exports, around 93% to 96%, move through the Strait of Hormuz. So when Hormuz closes, the market instantly loses access to one of its largest and most concentrated supply arteries.
The disruption came in two phases. Pay attention to this, because the second phase is what changes everything.
First came the blockade. QatarEnergy halted LNG production on March 2 and declared force majeure two days later after Iranian drone strikes hit Ras Laffan and Mesaieed. That alone removed roughly 20% of global LNG supply almost overnight.
Then came what makes LNG fundamentally different from crude and diesel. Iran struck Ras Laffan again, and Qatar confirmed that two of its fourteen LNG trains, along with one gas-to-liquids facility, were damaged. That took out 12.8 million tonnes of annual LNG capacity for an estimated three to five years. Even if peace came tomorrow, this capacity would not come back.
Read that again. Three to five years.
This is the critical difference. Crude is still mostly a blockade problem. If Hormuz reopens, flows can recover within weeks. Diesel is a blockade-plus-refining problem, but much of that capacity can restart once the war ends.
LNG is already both a blockade problem and a structural damage problem at the same time.
There is no real spare capacity elsewhere. The US and Australia can redirect some spot volumes, but every cargo sent to Asia is one not sent to Europe. This is not a solution. It is a zero-sum redistribution.
That is why the country-level exposure matters. Pakistan and Bangladesh were hit immediately. India has limited flexibility. South Korea warned of severe stress within days. China is better buffered, but still materially exposed. Europe looks less vulnerable on paper because post-winter storage helps, but its risk is rising fast as the natural balancing buyer for displaced US cargoes.
Dutch TTF and UK wholesale gas prices jumped by almost 50%. Asian JKM rose nearly 39% on the day of QatarEnergy’s announcement. Those are the market’s way of rationing a system that has no emergency valve.
The LNG market is not just tighter for the duration of the war. It is tighter even after the war. And that is why LNG may prove to be the most consequential energy shock of all. Not because it always gets the biggest headlines, but because once this market breaks, there is almost nothing in the system that can heal it quickly.
No Fertilizer, No Food Security
Modern agriculture runs on fertilizer. Nitrogen produced through the Haber-Bosch process sits underneath yields for corn, wheat, rice, and soybeans. The Middle East became a fertilizer hub because it has cheap and abundant natural gas. The fertilizer is produced in the Gulf, loaded onto ships, and sent through Hormuz before it reaches farms worldwide.
The concentration is larger than most people realize. Roughly half of globally traded urea and about one-third of all fertilizer trade move through the Strait. QAFCO alone supplies about 14% of global urea. Gulf producers also account for around 20% of phosphate fertilizers and roughly 44% of global sulfur production. Once the Strait closes, nearly one million metric tons of fertilizer are physically stranded in the Gulf.
But here is what makes this worse than a simple shipping disruption. The feedstock behind fertilizer production is also being hit. Qatari LNG production has stopped, which cuts into gas availability for fertilizer plants. Egypt lost Israeli gas imports and now has to compete for expensive LNG on the spot market. China has already restricted urea exports to protect domestic farmers.
Prices reacted fast. Urea at the New Orleans import hub jumped 32% in a single week, from $516 to $683 per metric ton. One ton of urea now costs US farmers the equivalent of 126 bushels of corn, up from 75 bushels in December. After Russia invaded Ukraine in 2022, it took two to four months for urea prices to rise 40%. This time the market has already moved more than 28% within three weeks.
The timing makes it worse. Farmers in the Northern Hemisphere usually order fertilizer in March for April and May application. A ship from the Gulf to the US Gulf Coast takes around 30 days. Supply disrupted now does not just arrive late. It risks missing the planting window altogether. There are no strategic fertilizer reserves in the G7. The Saudi pipeline that helps crude bypass Hormuz cannot move ammonia or urea.
The Hidden Domino: Sulfur
This is where the story gets dangerous in ways most analysts are not modeling. Gulf producers account for roughly 44% of global sulfur, and sulfur is largely a byproduct of oil refining. When refineries shut down, sulfur production falls with them. Sulfuric acid is needed to turn phosphate rock into usable phosphate fertilizer. Even countries with their own fertilizer plants may find that they cannot produce enough phosphate fertilizer if sulfur availability collapses. That is how a regional energy and shipping shock turns into a broader agricultural input shock.
Why This Eventually Becomes a Food Story
The exposure is highly uneven, but the global consequences are not. India depends heavily on Middle Eastern urea and phosphate imports, and it is the world’s largest rice exporter. Brazil is deeply reliant on imported fertilizer and dominates soybean exports. Europe has already lost Russian supply and now risks losing the Middle Eastern alternative as well. Africa is the most fragile of all, because import dependency is high and the aid backstop that existed in 2022 is much weaker today.
The comparison with 2022 matters. Back then, fertilizer prices rose more slowly, sulfur supply stayed stable, grain prices were high enough to offset some of the pain, and foreign aid systems were still functioning. This time the price reaction is faster, sulfur is directly hit, grain prices are lower, and the global safety net is thinner. In some ways, this setup is worse.
So here is the timeline:
That is why fertilizer matters more than most investors think. It does not usually break first. But when it breaks, the consequences arrive later, hit harder, and reach much further than the market expects.
Why Helium is a Strategic Vulnerability
Helium sits at the intersection of advanced technology, healthcare, and aerospace. In semiconductor manufacturing, it cools silicon wafers during etching. In MRI machines, it cools superconducting magnets to near absolute zero. In aerospace, it purges and pressurizes rocket fuel tanks. These are mission-critical uses with no practical substitute.
What makes helium different from almost every other commodity in this crisis is that it is both non-renewable and effectively irreplaceable. Once released into the atmosphere, it escapes permanently. You cannot make more.
Qatar produces roughly 30% to 33% of the world’s commercial helium, all of it as a byproduct of LNG production at Ras Laffan. When QatarEnergy halted LNG output in early March, helium production stopped automatically. That instantly removed around 5.2 million cubic meters per month from the market.
Before the crisis, the helium market was carrying an estimated supply overhang of around 15%. So the net shortage is closer to 15% than the full 30%-plus headline. Serious, but not yet catastrophic. The problem is what happens next.
The logistics make the shock worse. Helium is transported in a small global fleet of roughly 2,000 specialized cryogenic ISO containers. Many are now stranded in Qatar or trapped in disrupted shipping routes. Even if Hormuz reopened tomorrow, repositioning those containers would take months. And here is the part that makes helium uniquely cruel: liquid helium leaks continuously even in the best containers. The buffer is not only small. It is slowly evaporating.
The market can prioritize. MRI and medical uses will get first call. Semiconductor fabs will rank near the top. Lower-value uses will be squeezed out first. South Korea sources about 65% of its helium imports from Qatar, while Taiwan gets around 69% from Gulf suppliers. That places Samsung, SK Hynix, and TSMC close to the center of the risk map.
The danger is not that the system breaks tomorrow. It is that the margin for error is far smaller than most people think. The world’s most advanced chip industry and one of its most essential medical technologies both depend on a gas that roughly one-third of the market gets from a single complex that has already been hit.
Petrochemicals, Aluminum, and Jet Fuel
These three markets form the connective tissue of the industrial economy. When they break, the damage spreads into manufacturing, construction, healthcare, and aviation.
Petrochemicals: this one is serious
Petrochemicals may be the least appreciated risk in this entire map. Naphtha, ethylene, and polyethylene are the building blocks of plastics, and plastics sit inside food packaging, medical devices, water pipes, insulation, and auto parts.
The Middle East directly produces around 19 million tonnes of polyethylene capacity per year, roughly 14% of global capacity. But the real exposure is much larger. Around 80% of Asia’s seaborne naphtha imports come from the Middle East, and naphtha is the feedstock Asian steam crackers use to make ethylene and propylene. So the system is hit twice: directly through lost Gulf production, and indirectly through lost feedstock for Asian crackers. According to industry estimates, roughly half of global polyethylene capacity is either directly offline or indirectly affected.
North America has one big advantage: its petrochemical industry is largely ethane-based, not naphtha-based. That makes US producers the swing suppliers of the crisis. But they cannot replace the combined Middle Eastern and Asian shortfall.
And this is where petrochemicals become different from some of the other commodities. There is almost no real demand reduction available without economic damage. You can fly less and save jet fuel. You cannot meaningfully use less plastic in hospital supplies, food packaging, or water infrastructure without causing disruption somewhere else. The system has only weeks of buffer, not months, and very little room to conserve without pain.
Aluminum: a manageable pain
Aluminum looks threatening at first because the Middle East accounts for around 6.16 million tonnes of output, roughly 8% to 9% of global production. But unlike diesel or LNG, aluminum still has a real global safety net. China produces around 60% of global aluminum and remains unaffected. The direct production loss is roughly 500,000 to 600,000 tonnes per year, less than 1% of global output. LME stocks exist, demand can be delayed, and recycling can absorb part of the pressure. A squeeze, not a systemic fracture.
Jet fuel: it will hurt, but we can adapt
Middle Eastern refineries that were important jet fuel producers have been shut or impaired, and Europe in particular is exposed because roughly half of its jet fuel imports came from the Middle East before the war. The supply disruption is estimated at around 10% to 15%. Jet fuel prices in Singapore have surged, and the premium over crude has widened sharply because Middle Eastern medium-heavy sour crude is especially well suited for kerosene production, while lighter US shale crude gives lower jet fuel yields.
But jet fuel differs from diesel in one crucial way: demand can actually be cut.
Airlines can cut marginal routes.
Companies can reduce business travel.
Some short-haul demand can shift to rail.
Tourism suffers, corporate travel falls, and the sector feels pain, but the broader economy is better able to absorb it than a diesel shortage or a petrochemical shortage.
The hierarchy matters. Petrochemicals are dangerous because the system cannot conserve them without hurting itself. Aluminum is manageable because the world still has inventories, substitution, and spare capacity. Jet fuel can spike violently, but it is one of the few markets where demand destruction is actually feasible. They are all part of the same shock. But they do not all matter in the same way.
This Is Worse Than 2022
The instinct is to reach for historical analogues. But the pattern breaks almost immediately.
In 2022, Europe had a lifeline: LNG from the US and Qatar. In 2026, Qatar is not the solution. Qatar is the problem. There is no spare capacity to absorb a 20% loss in global LNG trade. The valve is gone.
The fertilizer and semiconductor parallels break the same way. The 2022 neon shock mattered for legacy lithography. The 2026 helium shock hits the entire advanced chip stack. The nitrogen loss arrives simultaneously with a sulfur deficit that compounds into phosphate fertilizers.
And the deeper reason the 2022 analogy fails: in 2022, the supply never actually disappeared.
Russian oil kept flowing to India and China. Shadow fleets and third-country workarounds kept the global pie roughly the same size, just sliced differently. A sanctions regime can be interpreted loosely. A physical blockade cannot. Ships either pass through Hormuz or they do not. And infrastructure that has been destroyed does not care about diplomatic breakthroughs.
That is why the effects of 2022 faded. And that is why 2026 will not fade the same way.
How Bad Is This, Really?
Three markets are already past the point of buffer: LNG, helium, and petrochemicals. None has a conservation mechanism. Price is doing all the rationing.
Diesel places the critical window in April to May. When it runs out, this becomes a logistics story, not an energy price story.
Fertilizer is the sleeper. If the disruption affects spring planting decisions, the consequences show up in 2027 crop yields, not this quarter’s commodity prices. By the time the market prices the damage, the damage is locked in.
Crude oil has the longest buffer, stretching into the summer. That is why oil is our smallest problem, and the last domino, not the first. By the time crude becomes a volume problem, the industrial economy will already have gone through months of forced shutdowns and physical shortages.
A ceasefire does not reset the board. Qatar’s damaged LNG trains need three to five years to rebuild. Fertilizer that missed the spring window does not get a second chance. Peace negotiations can stop the clock on some of these commodities. But for others, the clock has already run out.
Where the Factories Stop
I originally planned to keep all of Part I free, but the industry analysis turned into something deeper than expected and it directly maps itself to Part II.
