The escalating conflict between Iran, Israel, and the United States has brought two of the world’s most critical shipping routes to a near-standstill, creating a global supply chain crisis that’s already hitting consumers’ wallets. Vincent Clerc, CEO of Danish shipping giant Maersk, warned in an exclusive BBC interview that the disruption is forcing shipping companies to reroute vessels around Africa’s Cape of Good Hope, adding significant costs that will inevitably be passed on to businesses and consumers.
The Human and Economic Toll
“The main concern is the safety of our crews, is the safety of our assets,” Clerc told the BBC, explaining why Maersk and other major shipping lines are avoiding the Strait of Hormuz and Red Sea. According to the UN’s International Maritime Organization, at least seven seafarers have been killed in the Strait of Hormuz since the conflict began, with several others injured. This human cost underscores the immediate dangers that are disrupting global commerce.
The economic impact is already measurable. Clerc revealed that the longer voyages around Africa add about $200 to the cost of shipping a standard 20-foot container, translating to “anything from a 15% to a 20% increase on some of the freight cost.” These additional expenses come on top of higher oil prices, with crude having surged above $100 per barrel for the first time since 2022 due to the conflict. The Strait of Hormuz alone handles about 20% of the world’s oil, and its effective closure has created what analysts call “the biggest supply shock at least in modern global oil market history.”
Global Ripple Effects
The disruption is creating a domino effect across global economies. In Asia, governments are scrambling to respond to soaring energy costs. South Korea and Thailand have announced plans to cap fuel prices, while Vietnam is preparing to temporarily remove taxes on fuel imports. The Philippines has implemented a four-day working week for most public offices to save energy, and universities in Bangladesh have shut down for the same reason.
Roc Shi from the University of Technology Sydney explained that for Japan and South Korea, which source the majority of their energy from Gulf states, this represents “a supply chain crisis, not just a price spike.” The situation is particularly acute because, as Hunter Kornfeind of Rapid Energy Group noted, “We’re talking apples to oranges in terms of the need” compared to previous supply disruptions.
Consumer Impact Beyond Fuel
The consequences extend far beyond what drivers pay at the pump. In the UK, analysts warn that every $10 increase in oil pushes up pump prices by roughly 7p per liter, with average petrol prices potentially breaching 150p per liter if oil doesn’t fall back. But the impact doesn’t stop there – higher transport costs for supermarkets could translate to increased food prices, while mortgage rates are rising as lenders adjust to economic uncertainty.
Perhaps most immediately affected are households relying on heating oil, particularly in rural areas and Northern Ireland where about two-thirds of homes use oil for heating. Prices have more than doubled in some areas, with one Cornwall resident seeing quotes jump from �314 to �653 for 500 liters within days of the conflict beginning. UK Chancellor Rachel Reeves has promised to explore options to address these “unique challenges,” while the Competition and Markets Authority has warned suppliers against profiteering.
Searching for Solutions
Governments have suggested naval escorts as a potential temporary solution to reopen vital waterways. When US Energy Secretary Chris Wright posted on social media that the US navy had successfully escorted an oil tanker through the Strait of Hormuz, oil prices fell sharply – only to rise again when the White House clarified no such escort had occurred. This volatility highlights how sensitive markets are to any potential resolution.
Clerc acknowledged that “effective” naval protection could provide “at least a temporary reprieve” but stressed he wasn’t willing to put staff at risk. He emphasized the practical challenges, noting that “you’re very close from the Iranian coastline, so you don’t have a lot of time to react, so you would need a significant presence from the Navy to be able to provide a shield all the way through.”
The Path Forward
Despite the grim outlook, there are glimmers of hope. Oil prices plunged 10% after US President Donald Trump warned Iran not to block the Strait of Hormuz, suggesting the conflict could be “short-term.” Asian stock markets responded positively, with Japan’s Nikkei 225 gaining 3.3% and Hong Kong’s Hang Seng up 1.7% as economic concerns eased temporarily.
However, Clerc believes a diplomatic solution is essential for lasting stability. “Ultimately we need to get back to something where freedom of navigation and peaceful navigation is restored,” he told the BBC. With 132 ships reportedly stuck in the Gulf as of Monday, and some vessels turning off transponders to hide their locations, the shipping industry faces continued uncertainty.
The question now is how long businesses and consumers can absorb these increased costs before they translate into broader economic slowdown. As one analyst put it, a temporary rise to $100 per barrel could knock 0.4 percentage points off global economic growth – a significant impact in an already fragile economic environment. The resolution of this conflict will determine whether this remains a temporary supply shock or becomes a prolonged drag on the global economy.