The closure of the Strait of Hormuz due to the Iran war has led to significant market turmoil and supply chain disruptions across the globe. Southeast Asian companies have collectively lost at least $216.9 billion in market value since the conflict began in late February, with sectors such as petrochemicals and tourism being particularly affected. Thai petrochemical giant Siam Cement saw its market capitalization drop by 18% during this period. The effective closure of the Strait, a vital oil shipping lane, has heightened supply concerns, directly impacting energy prices and the profitability of energy-dependent industries. Technical support levels in major Southeast Asian indices have been breached, triggering algorithmic selling and margin calls, while company earnings forecasts have been revised downward, especially for firms with high energy input costs or exposure to international travel. Technical indicators like the Relative Strength Index (RSI) have fallen into oversold territory for several blue-chip stocks, suggesting potential for short-term technical bounces, but overall sentiment remains bearish until there is clear resolution in the Middle East [1].
Globally, surging oil prices are rippling through economies, with Brent crude briefly topping $119 a barrel last week—the highest since the war began and a level last seen in July 2022. As of Monday, Brent prices had settled at about $113 a barrel. Vessel traffic through the Strait of Hormuz has plummeted from over 100 ships per day before the conflict to fewer than five ships daily, leaving millions of barrels of oil and other commodities landlocked. Analysts warn that if the crisis lasts more than three or four months, it could become a systemic problem for the world economy. Key fossil fuel production facilities, including liquified natural gas plants, have also been impacted by strikes across the Middle East. The longer the strait remains closed and facilities offline, the greater the risk of energy shortages and knock-on effects for the U.S. and other economies [2].
Chinese suppliers are already raising prices for goods exported to the U.S. due to the swings in oil prices and the closure of the Strait of Hormuz. Devi Wei, a pickleball paddle producer, has increased prices by as much as 20% and warned that further hikes, possibly doubling prices, may be necessary if the Iran war persists. Other manufacturers, such as James Li (scarves) and Wang Mingming (toys), are also passing on higher costs to customers and hoarding materials in anticipation of further disruptions. Cameron Johnson, a supply chain consultant, predicts competition for oil-related products among entire sectors if the crisis continues, with potential triage between industries such as autos and medical supplies. The biggest concern among Chinese manufacturers is the impact of costlier oil on global consumer spending, as higher gas prices reduce discretionary income [3].
Analysts and market participants across all sources emphasize the heightened risk aversion, uncertainty, and potential for further downside if the conflict prolongs or escalates. While technical indicators suggest the possibility of short-term rebounds, the overall outlook remains negative until geopolitical tensions ease or governments intervene with fiscal support [1][2][3].
CONCLUSION
The closure of the Strait of Hormuz amid the Iran war has triggered a sharp sell-off in Southeast Asia, surging oil prices, and global supply chain disruptions. Analysts warn that the worst may still be ahead if the conflict persists, with further price hikes and shortages likely across multiple industries. Market sentiment remains bearish, and the situation is closely watched for signs of resolution or government intervention.