Industries such as auto manufacturing and consumer electronics may slow or halt production, according to Abucell, who expects delays for drugs, medical supplies and temperature-controlled goods.
Historically, geopolitical shocks tend to fade quickly when it comes to economic impact. Last summer’s flare-up between the US and Iran, for example, caused crude prices to rise briefly to around $80 a barrel before quickly stabilizing. Despite initial fears the Strait of Hormuz avoided mass disruption.
Analysts say this time is different.
“The scale (of Iran’s retaliation) was a big, big surprise,” George Lyon, head of geopolitical analysis at research company Ristad Energy, told NBC News on Saturday after the US-Israeli strikes.
Last year, Iran’s retaliatory strikes were “limited” and “very telegraphed,” he said. This time, the scope and intensity is wider, “It’s a completely different world than what the market expected.”
In addition to disrupting business, it is expected to make shipping more expensive, with insurers canceling policies and raising the price of coverage. On cancellation, according to brokers, insurers are offering coverage at new renegotiated prices, not denying coverage.
This past weekend, insurance broker Marsh predicted that insurance prices could increase by 50% in the coming days. With tensions rising and at least one oil tanker already damaged, Marsh Global’s head of marine, cargo and logistics, Marcus Baker, said he expects insurance costs to rise by 100%.
“You know, one of these ships with 25 crew members is making the decision to go into a bombed area tomorrow. And I think that’s a fundamental thing that many ship owners are considering now more than they did 20 or 30 years ago,” Baker said.
A crew member died on Monday after an unmanned boat hit an oil tanker in the Gulf of Oman, Oman’s maritime security center said in a statement on X. A crew of 21 had to be evacuated because of the flames, but one crewman was killed by an explosion in the engine room.
In addition to the danger to the crew, the tankers are getting stuck and damaged, Reuters reported. Ken Fichtelman, head of US marine and cargo at insurance broker McGill & Partners, said he expects insurance prices to double, not just in the Persian Gulf.
