Impact of Strait of Hormuz Crisis on Global Trade: Route Diversion and Economic Consequences

Leonard Terver Thomas; Okwong Koko Bassey

doi:10.56201/ijebm.vol.12.no6.2026.pg252.264

📄 Download Paper

Impact of Strait of Hormuz Crisis on Global Trade: Route Diversion and Economic Consequences

Leonard Terver Thomas, Okwong Koko Bassey

Abstract

This study examines the impact of the Strait of Hormuz crisis on global trade, with a particular focus on route diversion and its associated economic consequences. As a critical maritime chokepoint, the Strait accounts for approximately 20–25% of global oil trade and a significant share of liquefied natural gas flows, making it central to global energy security. The 2026 geopolitical disruption led to a sharp decline in shipping activities, resulting in a substantial supply shock that reverberated across international markets. Adopting a qualitative analytical framework supported by empirical data, the study finds that the crisis triggered a loss of over 250 million barrels of oil supply, alongside a surge in crude oil prices exceeding 60% within a short period. In response, global shipping firms diverted routes toward longer alternatives such as the Cape of Good Hope, leading to increased transit times, higher freight costs, and elevated insurance premiums. These adjustments, while mitigating complete supply collapse, proved insufficient to offset the magnitude of the disruption. The findings further reveal significant macroeconomic consequences, including rising inflation, reduced global trade growth, and downward pressure on GDP performance. Developing economies, particularly Nigeria, were disproportionately affected due to their dependence on imported refined petroleum products and external logistics systems. The study concludes that the crisis highlights the structural vulnerability of global trade to geopolitical risks concentrated in key maritime routes. It recommends diversification of energy sources, investment in alternative trade corridors, and strengthened international cooperation to enhance resilience.

Keywords

Strait of Hormuzglobal traderoute diversionsupply shockeconomic impact

References

International Energy Agency. (2024). World energy outlook 2024. Paris: IEA Publications. https://www.iea.org/reports/world-energy-outlook-2024 U.S. Energy Information Administration. (2024). World oil transit chokepoints. Washington, DC: U.S. Department of Energy. https://www.eia.gov/international/analysis/special- topics/World_Oil_Transit_Chokepoints Federal Reserve Bank of Dallas. (2026). Global economic implications of a Strait of Hormuz disruption. Dallas, TX: Federal Reserve Bank of Dallas. https://www.dallasfed.org/research/economics/2026/0320 United Nations Conference on Trade and Development. (2026). Maritime trade disruptions and global supply chain resilience. Geneva: UNCTAD. https://unctad.org/publications World Bank. (2023). Global economic prospects: Navigating global shocks. Washington, DC: World Bank. https://www.worldbank.org/en/publication/global-economic-prospects Reuters. (2026, April 2). Oil shortage fallout will ooze slowly but surely. Reuters. https://www.reuters.com MarketWatch. (2026). Oil market reactions to Strait of Hormuz disruptions. MarketWatch. https://www.marketwatch.com New York Post. (2026, April 2). Tanker ships face high costs amid Hormuz crisis. New York Post. https://nypost.com Khaleej Times. (2026). Hormuz shipping disruption and global trade risks. Khaleej Times. https://www.khaleejtimes.com The Guardian. (2026, April 3). Global fertilizer supply risks amid Hormuz crisis. The Guardian. https://www.theguardian.com Discovery Alert. (2026). Closure of the Strait of Hormuz and global oil supply implications. Discovery Alert. https://discoveryalert.com.au Wikipedia. (2026). Strait of Hormuz crisis (2026). Wikipedia. https://en.wikipedia.org/wiki/Strait_of_Hormuz_crisis African Continental Free Trade Area. (2021). Agreement establishing the African Continental Free Trade Area. African Union. https://au.int/en/treaties/agreement-establishing-african- continental-free-trade-area International Monetary Fund. (2024). World economic outlook: Managing global divergences. Washington, DC: IMF. https://www.imf.org/en/Publications/WEO Organisation for Economic Co-operation and Development. (2024). Global trade outlook and statistics. Paris: OECD Publishing. https://www.oecd.org/trade British Petroleum. (2023). Statistical review of world energy. London: BP. https://www.bp.com/statisticalreview United Nations. (2024). World economic situation and prospects. New York: United Nations. https://www.un.org/development/desa World Trade Organization. (2024). World trade report 2024. Geneva: WTO. https://www.wto.org/english/res_e/publications_e/wtr24_e.htm Energy Information Administration. (2024). Short-term energy outlook. Washington, DC: EIA. https://www.eia.gov/outlooks/steo United Nations Development Programme. (2023). Human development report: Global challenges and resilience. New York: UNDP. https://hdr.undp.org

Impact of Strait of Hormuz Crisis on Global Trade: Route Diversion and Economic Consequences

Abstract

Keywords

References

More Articles from IIARD INTERNATIONAL JOURNAL OF ECONOMICS AND BUSINESS MANAGEMENT