Insight Focus
Hormuz disruption exposes global trade vulnerability. Knock-on effects are reshaping flows across Suez, Bab el-Mandeb and the Panama Canal, driving congestion, higher costs and persistent risk. The crisis highlights how disruption can spread across chokepoints, leaving global supply chains highly exposed.
The US–Iran war continues to rage on, now firmly into its third month. As of late May, any resolution remains uncertain, with negotiations ongoing but the threat of further escalation still in place, as the conflict—and the blockade of the Strait of Hormuz—expose just how critical the world’s maritime chokepoints are to global trade.
For the global supply chain, the immediate focus has been on Hormuz, where shipping remains gridlocked and flows severely disrupted. Yet as disruption ripples outward, attention is shifting beyond the Gulf, raising questions over the state of other key chokepoints in 2026 and how far the impact could spread across the global shipping network.
Suez Traffic Struggles as Security Risks Persist
Suez Canal traffic remains under pressure as renewed instability linked to the US–Iran war reinforces a sustained shift away from Red Sea routes. Tanker volumes diverted around the Cape of Good Hope reached a record 24 million deadweight tonnes in the week of April 13, highlighting how security concerns are extending what began as a temporary response into a more structural change in global shipping patterns.
A late-2025 ceasefire briefly revived interest in Suez transits, but renewed Gulf escalation has reversed that trend, with major carriers halting returns and conditions unlikely to stabilise soon. The longer Cape route, adding around two weeks to Asia–Europe journeys, is now favoured for reliability, pushing up freight rates and increasing activity at southern African ports while limiting any near-term recovery in Suez traffic.
Despite this broad retreat, some limited Suez transits persist. CMA CGM has continued to run select services through the Red Sea, maintaining routes such as its Asia–Mediterranean Ocean Meds string even as peers divert. However, these movements remain cautious and tactical, with recent incidents – including two Iranian strikes on CMA CGM-linked vessels in the Strait of Hormuz in April and May – highlighting the ongoing risk.
Capacity in the Red Sea seems to be stabilising rather than recovering, suggesting that while isolated transits remain, the wider market is still in a holding pattern rather than returning to the canal at scale.
Bab el-Mandeb Strait Faces Heightened Disruption Risk
The Bab el-Mandeb Strait, a narrow gateway linking the Indian Ocean to the Red Sea and onward to the Suez Canal, remains a critical artery for oil, containerised goods and bulk commodities moving between Asia and Europe.
That strategic role has come back into focus as the US–Iran war raises the prospect of disruption spreading beyond the Gulf, with Iranian officials and recent reporting suggesting Iran could seek to disrupt shipping via its Houthi proxies in Yemen.
While a full blockade has not materialised, the threat alone continues to shape shipping behaviour. Early in the conflict, major carriers paused transits through the strait, extending diversions away from Suez, while insurance constraints and security concerns remain key barriers to a broader return. Previous Houthi attacks in 2023 had already demonstrated how limited but targeted strikes can deter traffic without sustained disruption, reinforcing the strait’s sensitivity to perceived rather than actual risk.
The stakes are heightened by the strait’s role as an outlet for energy and commodity flows rerouted away from the Persian Gulf. Any escalation would not only compound existing disruption from Hormuz but also further strain global trade, increasing the risk of a wider chokepoint effect across already fragile shipping networks.
Panama Canal Faces Strain from Rerouted Energy Flows
Away from the Middle East, the US–Iran war is also reshaping shipping flows further afield, with the Panama Canal emerging as a key alternative route for energy trade. Oil shipments through the waterway have surged, rising more than 70% year-on-year in April, as Asian buyers pivot to US crude to offset disrupted Middle Eastern supply, pushing flows to multi-year highs.
This surge is now feeding directly into congestion and cost pressures. US crude volumes through the canal have climbed above 200,000 barrels per day, while intense competition for limited transit slots has driven auction prices sharply higher, with extreme cases reaching several million dollars. Waiting times are also rising, and upcoming maintenance at the Gatun Locks in June is set to temporarily reduce transit capacity, raising the risk of further delays or costly rerouting.
Source: SEB
Weather risks are adding another layer of uncertainty. The potential return of El Niño later this year could reduce rainfall in Central America and lower water levels in the canal system, recalling the drought-driven restrictions seen in 2023–24, even as authorities say current conditions remain stable.
Despite the uptick, the Panama Canal cannot act as a substitute for the Strait of Hormuz. Its size constraints prevent the passage of super tankers, and volumes remain a fraction of Gulf flows, limiting its role to a supplementary route. However, the combination of surging demand, congestion and climate risk highlights how the conflict is not only shifting trade routes but placing strain on alternative infrastructure already operating close to its limits.
Malacca Strait Faces Heightened Scrutiny
The Strait of Malacca, the world’s most critical maritime chokepoint, has come under renewed scrutiny as the US–Iran war highlights how a single passage can disrupt the global economy. Carrying roughly a third of global trade and more than a quarter of seaborne oil flows, the strait is even more systemically important than Hormuz, acting as the primary artery linking Asian manufacturing hubs with energy supplies from the Middle East.
The lesson from Hormuz is now being closely watched in Southeast Asia. “If they go to war in the Pacific, what you are witnessing now in the Strait of Hormuz is just a dry run,” Singaporean Foreign Affairs Minister Vivian Balakrishnan said last month.
In the case of Malacca, the risks are amplified by geography: at just 2.7 kilometres wide at its narrowest point, and handling tens of thousands of vessels each year, it represents one of the most concentrated and indispensable trade corridors in the world.
Ships waiting at anchor off Singapore and the Malacca Strait
Unlike other chokepoints, however, Malacca offers limited practical alternatives. Rerouting around the Indonesian archipelago or via Australia would add significant time and cost, making large-scale diversion economically unviable for most operators. As a result, any sustained disruption in the strait would likely trigger cascading shocks across global supply chains—potentially exceeding those seen during the Hormuz crisis given its broader role in both energy and manufactured goods trade.
The Hormuz crisis has already begun to shift thinking around control and monetisation of chokepoints. In Southeast Asia, the suggestion of introducing transit tolls in the Strait of Malacca was briefly raised by Indonesian policymakers but swiftly walked back. Even so, it was enough to unsettle markets.
The strait remains underpinned by strong regional coordination, with Indonesia, Malaysia and Singapore aligned on maintaining open passage and freedom of navigation. However, the episode underscores how quickly perceptions of control can translate into higher insurance premiums and shipping costs.
Black Sea Serves as Both a Template and a Risk for Chokepoint Disruption
The Black Sea and Turkish Straits bring into focus a broader risk emerging from the US–Iran war: that the disruption seen in the Strait of Hormuz could be replicated elsewhere through market-driven mechanisms rather than physical blockades. A recent report has suggested that this “Hormuz playbook” (where shipping is curtailed by rising insurance costs and risk aversion rather than direct closure) could, in theory, be applied to other concentrated trade corridors such as the Black Sea or even the Baltic.
While this remains a theoretical scenario, it is not without precedent. During the Russia–Ukraine war, the Black Sea experienced similar dynamics, where heightened threat levels and surging war-risk premiums repeatedly constrained grain exports without the need for sustained physical disruption. This demonstrated how trade flows can be restricted through financial and risk channels alone, effectively offering a real-world example of how such a model can take hold.
The Turkish Straits, governed by the Montreux Convention, remain a critical gateway for these flows, meaning any deterioration in the wider risk environment could quickly translate into reduced traffic and higher costs for energy, grain and bulk commodities moving through the region.
At the same time, policymakers are increasingly drawing lessons from the Black Sea in responding to current disruptions, with proposals such as internationally backed “grain corridor”-style arrangements.
Source: USDA
Together, these developments position the Black Sea as both a warning and a template: a region where chokepoint disruption has already been shaped by risk perception and insurance dynamics, but also one that offers a model for restoring flows under conditions of conflict.
Looking Ahead
Ultimately, the US–Iran war has underscored how deeply global trade depends on a small number of chokepoints, where disruption can ripple far beyond the conflict itself.
As the war continues in the Middle East, maintaining stability in these chokepoints remains critical to safeguarding global trade flows. Even the threat of instability can reshape shipping patterns, lift costs and strain supply chains, highlighting just how exposed global markets remain to events concentrated in a handful of vital corridors.
