Impact of the USA - Iran Conflict on Global Supply Chains

Abstract

The outbreak of armed conflict between the United States and Iran, commencing on February 28, 2026 with coordinated US–Israeli airstrikes codenamed Operation Epic Fury, has precipitated the most significant disruption to global supply chains since the COVID-19 pandemic and the 1970s oil crisis. The closure of the Strait of Hormuz - a 34-kilometre chokepoint through which approximately 20 million barrels of oil per day and critical commodity volumes flow - has unleashed cascading shocks across energy, agriculture, advanced technology, and financial markets. This paper provides a comprehensive empirical analysis of those disruptions, assessing impacts on energy markets (Brent crude surging from $71 to $126/bbl), fertilizer supply chains (urea prices up 50%), helium and semiconductor manufacturing (one-third of global helium supply disrupted), shipping logistics (freight rates up 50%, transit times extended by 10–20 days), and broader macroeconomic indicators. The paper evaluates near-term sectoral vulnerabilities, examines disproportionate regional exposure with particular attention to Asia and South Asia, and presents three forward scenarios - ceasefire stabilization, escalation, and frozen conflict. This study aims to concludes with policy recommendations for supply chain resilience, strategic reserve reform, and multilateral risk governance.