‘Degree of complacency’: are supply chains prepared for impact of ongoing Iran war?

Iran’s blockade of the Strait of Hormuz since late February has triggered alarming economic warnings, including a potential global recession, jet fuel shortages within weeks, and record-high oil prices. Despite these risks, global markets—particularly US stocks buoyed by the AI boom—have shown surprising stability, creating a growing disconnect between financial calm and supply chain threats. Stockpiles have softened immediate impacts, but the prolonged closure of Hormuz is depleting emergency reserves of oil and critical commodities, with recovery potentially taking months even if the waterway reopens. Companies are increasingly acknowledging supply disruptions, with Lucid Motors warning that the conflict has disrupted raw material supplies and raised costs for its Saudi-based electric vehicle production. Some executives, like BMW’s finance chief Walter Mertl, downplay the impact, calling it temporary, while others express concern over complacency. One industry insider cautioned that businesses assuming the crisis will resolve itself are ‘playing with fire.’ Supply chain mapping improvements since the pandemic have helped, but uncertainties remain about where and when shortages will strike hardest. Governments in Asia have urged energy conservation, with some implementing rationing, while Europe faces higher fuel costs and potential interest rate hikes to curb inflation. Central banks and analysts stress that the longer the blockade continues, the greater the risk of widespread economic disruption, though markets have yet to reflect the severity of the threat.