There’s always something commanding our attention. While technology has allowed us to be more efficient, it’s also pushed us into doing more. We fill our time with more, instead of doing less and giving us more time to stop and think. There’s always a bill to pay, medicine to pick up, groceries to order, appointments to make, and shows to watch. But with all of it, energy is used. Not just our own, but energy that comes from commodities—oil, gas, aluminum, and helium. From the food we eat, the clothes we wear, the cars we drive, and the phones we use, commodities are part of it all.  

Since the Iran conflict escalated, the Strait of Hormuz in Iran has been mostly closed for weeks. Vessel traffic fell from roughly 290 ships per week to only a handful. But the disruption went well beyond the narrow waterway. Iran's retaliatory strikes on the Gulf energy infrastructure hit Qatar's Ras Laffan Liquid Natural Gas (LNG) facility, prompting phased shutdowns across the region—meaning the story became both a transit and production story.

What follows is an accounting of what is stranded, what is shutting down, and what that means downstream (for us).

OIL

Roughly 21 million barrels of crude oil used to pass through Hormuz every day, which is about 21% of the world's petroleum liquids. Saudi Arabia, the UAE, Iraq, Kuwait, and Qatar are the primary exporters. The partial bypasses set up—Saudi Arabia's East-West pipeline (~5 million barrels per day) and the UAE's ADCOP pipeline to Fujairah (~1.5 million)—covered less than 1/3 of the normal flow. The rest goes around the Cape of Good Hope, adding 2 to 3 weeks and significant cost, or sits in storage. Despite the 2-week ceasefire, oil is trading around $96.50 a barrel, still more than $25 higher per barrel than at the end of February. Relatedly, a quick scan of gas at the pump shows it at ~$1 per gallon higher. 

LNG

Qatar is one of the world's largest LNG exporters, supplying roughly 1/5 of global trade. The Iranian strike on Qatar's Ras Laffan facility has further curtailed output. It’s estimated reconstruction could take up to 5 years. Separately, a cyclone-related outage at Chevron's Australian facilities reduced Australian LNG output. The 2 events together lit a fire under gas markets. In particular, European gas prices surged as the continent scrambled to replace supply it had deliberately shifted toward Qatar post their move away from Russia.

HELIUM

Most people think of helium as what fills balloons and makes your voice change. The more consequential use is as a coolant in MRI machines and critically, in semiconductor fabrication. Qatar accounts for approximately 33% of world helium capacity, which is co-produced with LNG, meaning when Qatar's gas facilities go offline, the helium goes with them. François Jackow, CEO of Air Liquide, said last week: "Any shortage of helium supply to this industry would definitely limit the production of those most advanced chips. Given what's at stake today, that could be a major challenge for the world." This connects the Hormuz closure directly to the semiconductor supply chain.

FERTILIZERS

The Middle East was the source of close to 30% of global exports of major fertilizers in 2024, according to the International Fertilizer Association. The conflict reduced production of ammonia, urea, sulfur, and phosphates simultaneously. The regional benchmark price for urea in Egypt jumped over 50% after the conflict began. Yara International is one of the world's largest nitrogen fertilizer producers, who uses natural gas as a primary feedstock stated: "Farmers are now being put in a real squeeze. Input costs are significantly higher, crop prices are not." Last week’s USDA’s annual planting intentions report, stated acreage would fall in 37 of 48 states. Less corn grown means tighter supplies of animal feed, ethanol, and grocery staples downstream. CF Industries is one of the largest US nitrogen fertilizer producers and it saw its shares climb 37% last month.

ALUMINUM

Qatar's aluminum production has been operating at significantly reduced capacity. Aluminium Bahrain, one of the world's largest smelters who produces more than 1.62 million metric tons annually, recently had a phased shutdown. LME aluminum futures hit their highest level since 2022 in March. The supply gap from reduced capacity won’t close right away with the ceasefire, and it’s compounded by the 50% aluminum tariff already in place. Beer cans, auto parts, EV battery casings, and aircraft components are all aluminum-intensive.

PLASTICS AND COTTON

Naphtha, ethane, and propane—the building blocks of plastics—are made from oil. With oil prices up, plastic prices are rising. For example, Dow has doubled a previously announced polyethylene price hike. This price increase is being passed downstream to packaged goods companies. The knock-on: more expensive synthetics are pushing textile makers toward cotton, which had been oversold. Cotton futures hit 70 cents a pound in March, their highest since December 2024, with hedge funds cutting short positions.

WHAT THIS MEANS

We believe the market is still in the process of repricing how many supply chains run through this single corridor. The first week of the crisis was an oil story. The second week added gas and fertilizer. Now, even with a ceasefire, aluminum, helium, and plastics are part of the conversation. Each one has its own downstream cascade.

For portfolios, the Resources pillar of the 3 R's that have been guiding us all year, became a helpful force this past month. While it may be prudent to trim these winners with the announcement of a 2-week ceasefire, it is important not to assume it's all clear. Producers outside the Middle East may still be helpful in a portfolio, while the pressure on energy-intensive manufacturers, airlines, packaged goods companies, and any industry that relies on imported aluminum or helium, may still be there.

It’s not only something to understand as an investor, but also as a consumer.