Expert Highlights Impacts Of Israeli-American Iran Crisis On Global Shipping Economy

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As the world continues to rue the effects of the ongoing crisis in the Middle East involving Israel, Iran, and the United States, experts and professionals in the maritime and shipping sector of the global economy have severally highlighted the economic impact of the war.

Particularly in petroleum and maritime, the impact of the crisis has affected outputs and revenues as the two important sectors have witnessed downtimes.

Speaking in a statement made available to the media, Dr. Uche Chukwu Amogu, a Lagos-based shipping, finance and mortgage professional, admitted that the ongoing crisis has had a noticeable effect on the operations of the two major sectors, particularly highlighting shipping and maritime as the worst hit.

“The ongoing Israel–United States–Iran conflict has had a significant impact on the global shipping industry, primarily because of disruptions in the Strait of Hormuz, one of the world’s most important maritime choke points,” he said.

“Approximately one-fifth to one-quarter of global seaborne oil, African exports and a substantial share of liquefied natural gas (LNG) normally pass through this narrow waterway connecting the Persian Gulf to international markets,” he further said.

Dr. Amogu further noted that due largely to the war, there has been an increase in attacks on vessels, explaining that the impact had made shippers reroute, even as he also admitted that delays and high freight and insurance costs are some of the impacts in the shipping business.

“The conflict has led to missile attacks, drone strikes, vessel seizures, and threats against commercial ships operating in the Persian Gulf and surrounding waters.

“Shipping companies have been forced to reroute vessels, delay voyages, or suspend operations in high-risk areas. Maritime traffic through the Strait of Hormuz has been severely disrupted, with attacks reported against merchant vessels and tankers.

“War-risk insurance premiums have risen sharply as insurers price in the increased threat to ships and crews. Shipping companies are also charging higher freight rates to compensate for longer routes, delays, and security concerns.

“Industry reports indicate substantial increases in tanker and container shipping costs following the escalation of hostilities,” he regretted.

He said further, “The conflict has disrupted the movement of crude oil, LNG, chemicals, fertilizers, and other commodities exported from Gulf countries.

“Delays at ports and restricted transit through Hormuz have affected global supply chains, leading to shortages, longer lead times, and increased transportation costs for manufacturers and consumers worldwide.”

He also regretted the volatility in the energy market,saying any disruption in the shipping business grossly affects the oil and gas sector.

“Because Gulf exports are heavily dependent on maritime transport, any disruption to shipping immediately affects oil and gas and other global economy prices. Escalating tensions have pushed energy prices higher and increased market volatility, creating uncertainty for shipping operators, cargo owners, and energy-importing countries.
“Governments and energy companies are accelerating investments in alternative export routes such as pipelines and non-Hormuz ports to reduce dependence on the Strait. Recent infrastructure agreements in the region reflect efforts to strengthen resilience against future disruptions.
“The crisis has caused local prices to rise because the conflicts have disrupted global oil supplies and increased transportation costs. When oil prices increase, the cost of fuel, electricity generation, manufacturing, and transportation of goods also rises.

“As a result, economic units in Africa are experiencing higher prices for foods, transportation, household goods, and other essential commodities. Most Countries that depend heavily on imported fuel are especially affected, as businesses pass increased operating costs on to consumers, leading to inflation and a higher cost of living.”

He noted that the conflict in the Middle East had also affected the global financial market, with emphasis on banks and other lending institutions adopting a cautious approach.

“The Israel–America–Iran crisis has increased uncertainty and risk across global financial markets, affecting banking and lending activities. Rising geopolitical tensions have led banks to adopt more cautious lending policies, particularly for industries exposed to international trade, energy markets, and Middle East operations.

“Higher oil prices and market volatility increase inflationary pressures, which have led to higher interest rates and borrowing costs for businesses and consumers. Banks also face greater risks related to foreign exchange fluctuations, potential loan defaults, and disruptions in cross-border payments and trade finance.

“As a result, financial institutions need to tighten credit standards, reduce exposure to high-risk sectors, and hold larger liquidity reserves, potentially slowing investment, business expansion, and overall economic growth. Mortgage banks are advised to be very cautious in diaspora lending, mostly to borrowers whose employer has some business link to the Gulf region, Israel, and America.

“Finally, the crisis has exposed the vulnerability of global maritime trade to geopolitical tensions in the Middle East. The shipping industry is facing higher operational risks, rising costs, and supply chain disruptions, while global markets are experiencing increased energy price volatility; the financial sector is facing a high-risk lending season and a volatile foreign exchange risk regime, and most nations are facing persistent increases in local prices.

“Until regional stability improves and safe navigation through the Strait of Hormuz is fully restored, the shipping sector is likely to remain under pressure from elevated security and economic risks which will continue to impact negatively on the global economy.”