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The US Iran war is rattling global markets, and the real chokehold is the Strait of Hormuz. This is a narrow corridor that carries about 20% of the world’s oil and liquefied natural gas (LNG), plus critical materials like sulfur, metals, fertilisers, infrastructure, and machinery that keeps industries moving.
The shock doesn’t stop at energy. India depends on Hormuz for petroleum‑based ingredients, and for shipping medicines (that account for nearly half of generic prescriptions) to the U.S. Any prolonged shutdown tightens pharma supply chains fast. Some pharma companies depend heavily on long‑haul cold‑chain cargo, which is used to transport vaccines, insulin, temperature-sensitive cancer treatments and immunotherapies. Reports say that Western pharma companies are already rerouting these vital pharmaceuticals
Drug makers including Merck (MRK), Novo Nordisk (NVO), and Takeda (TAK) all have operations in the Middle East so there is the potential that immunotherapy, GLP-1, insulin, gastroenterology and ADHD drugs could be impacted.
How it could play out 🎲
Could we see one of the largest disruptions to oil supply in history? The US is in talks with Iran, however with one quoting ‘a chance at peace’ and the other ‘Fake News’, it’s not yet clear which way this will go. The World Trade Organisation says if oil and gas prices stay high, global GDP growth in 2026 could fall by 0.3%, with Europe hit even harder. Some see a two‑week window for resolution: beyond that, oil could spike sharply again and force energy rationing across the globe.
Reopening the Strait of Hormuz could see oil prices turn around. However, some analysts say that damage to storage, refineries, and shipping infrastructure could keep prices elevated for months.
Are you feeling the impacts?
If you felt like flaunting your wealth and filled up your car this week, you would have paid around 42% more than you did a month ago. Thankfully, the NZ government is moving this week to give a fuel relief package, but only to some working families with children who qualify, hope this helps! ⛽ On top of the haul-truck sized increase in diesel prices, farmers could soon be grappling with higher costs for fertiliser too. Sulfur is vital for fertiliser production, and because sulfur is a byproduct of refining Middle Eastern oil & gas, a big chunk of global sulfur exports flows through the Strait of Hormuz.
EV owners must be laughing all the way to the plug, right? 🪫 Not exactly. Driving an EV can insulate you from petrol spikes, but not from the wider impacts like higher electricity prices, inflation in goods and services, and repairs and replacement parts being harder to come by.
Why investors should care
Energy shocks cascade. They affect transport, food, manufacturing, medicine, inflation, interest rates, and market sentiment. For long‑term investors, this is a reminder to consider diversification, and avoid emotional reactions to short-term volatility.
We’re not financial advisors and Hatch news is for your information only. However dazzling our writing, none of it is a recommendation to invest in any of the companies or funds mentioned. If you want support before making any investment decisions, consider seeking financial advice from a licensed provider. We’ve done our best to ensure all information is current when we pushed ‘publish’ on this article. And of course, with investing, your money isn’t guaranteed to grow and there’s always a risk you might lose money.
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