Beyond Oil: How Gulf Disruptions Are Rewiring Global Supply Chains

The 2026 escalation of conflict involving the United States, Israel, and Iran has pushed the Gulf region into a high-risk zone for global trade. While attention has centered on oil flows through the Strait of Hormuz, another major risk lies in non-oil supply chains—including fertilizers, ammonia, helium, LNG, and petrochemical feedstocks.

The Gulf, particularly Qatar, Saudi Arabia, and the United Arab Emirates, plays an increasingly strategic role in global production systems as a capital provider, logistics hub, and upstream industrial supplier, with growing ambitions in advanced sectors such as semiconductors and healthcare.

Disruption here is not just an energy shock; it is a multi-sector supply chain shock with cascading global implications.

Fertilizers and ammonia: The agriculture shock multiplier

The Gulf is a major global supplier of nitrogen-based fertilizers, particularly ammonia and urea, which are critical inputs for crop yields.

• Oman is the second largest exporter of urea (HS code 310210) globally, with a value of US$2.6 billion as of 2024. Meanwhile, Qatar has QAFCO (Qatar Fertiliser Company), one of the world’s largest single-site producers of ammonia and urea. 
• As of 2024, Saudi Arabia is the fourth largest global exporter of petrochemical-derived fertilizers (HS code 3105) worth a value of US$3.34 billion.

Why this matters

Fertilizers directly influence global food production. Any disruption in Gulf exports leads to:

• Higher input costs for farmers
• Reduced fertilizer application (especially in price-sensitive markets)
• Lower agricultural yields
• Rising global food prices

Impacted geographies

• South Asia & Southeast Asia: Highly dependent on imported fertilizers

Source: ITC World Trade Map

• Sub-Saharan Africa: Vulnerable to both price shocks and supply shortages
• Latin America: Large-scale agriculture exposed to input cost volatility

LNG and gas feedstocks: Industrial and power disruptions

The Gulf is central to global gas markets:

• Qatar is the largest exporters of liquefied natural gas (LNG) as of 2024, with a total value of US$56 billion
• The natural gas produced in top gulf regions such as Qatar and Oman is critical for both power generation and industrial processes

Industries exposed

• Power utilities (especially in Asia and Europe)
• Chemicals and fertilizers (gas as feedstock)
• Steel, cement, glass, and ceramics
• Industrial manufacturing reliant on heat-intensive processes

Transmission mechanism

A disruption leads to:

• Power price spikes
• Industrial production cuts
• Export competitiveness erosion

Helium: The hidden choke point for semiconductors and healthcare

One of the least visible but most critical risks is helium:

• Qatar is the second largest producer of helium, derived from natural gas processing

Why helium matters

Helium is essential for:

• Semiconductor manufacturing (cooling and controlled atmospheres)
• MRI machines and medical imaging
• Fiber optics and telecommunications
• Aerospace and scientific research

Supply chain implications

Helium shortages can:

• Disrupt semiconductor fabrication cycles
• Delay electronics production (consumer electronics, automotive chips)
• Impact hospital operations and diagnostics

Petrochemicals and industrial inputs: Inflation across goods

The Gulf is a major source of petrochemical feedstocks used in:

• Plastics and packaging
• Synthetic textiles
• Automotive components
• Consumer goods manufacturing

Impact pathway

Disruptions lead to:

• Higher raw material costs
• Increased packaging costs (affecting food and FMCG)
• Rising prices for industrial and consumer goods

Food systems: Dual pressure from inputs and logistics

Food systems face a double shock:

1. Input-side pressure

• Fertilizer shortages raise production costs

2. Logistics-side pressure

• Shipping disruptions increase freight costs
• Gulf ports act as redistribution hubs for many regions

Result

• Higher food prices
• Supply volatility in import-dependent countries
• Increased fiscal burden on governments (subsidies, food security programs)

Shipping, insurance, and trade finance: The amplification effect

Beyond physical supply, disruption in the Strait of Hormuz drives:

• Higher war-risk insurance premiums
• Shipping delays and rerouting
• Increased freight costs
• Trade finance tightening

These effects amplify across all sectors, especially for:

• Commodity importers
• Manufacturing exporters
• Emerging markets with limited bargaining power

Sector-wide exposure: A global ripple map

A supply chain shock beyond energy

The Gulf’s importance to the global economy extends far beyond oil. It is a critical supplier of invisible but essential inputs — fertilizers that feed crops, helium that enables chips and healthcare, and gas that powers industries.

A disruption in the Strait of Hormuz therefore triggers a multi-layered supply chain shock:

• Food systems are hit through fertilizers
• Technology supply chains through helium
• Manufacturing through gas and petrochemicals
• Trade systems through logistics and insurance

For businesses and policymakers, the key risk is not just energy scarcity, but systemic disruption across interconnected global supply chains.

How is India impacted?

India faces a compounded exposure to Gulf disruptions due to its structural reliance on the Strait of Hormuz for energy imports, fertilizer inputs, and trade flows. With a sizeable share of its crude oil and LNG sourced from the Gulf — alongside dependence on imported ammonia and urea — any disruption transmits quickly into higher input costs, widening fiscal pressures through subsidies, and elevated inflation risks. These pressures are further amplified by India’s sensitivity to food prices, where fertilizer cost spikes can directly affect agricultural output and government spending.

Beyond inputs, India’s role as both a major exporter and importer makes it highly vulnerable to logistics disruptions and rising trade costs. A large portion of its trade routes intersect with Gulf shipping lanes, meaning war-risk premiums, rerouting, and delays can erode export competitiveness — particularly for sectors such as engineering goods, chemicals, textiles, and pharmaceuticals. At the same time, higher petrochemical and energy costs feed into domestic manufacturing and consumer prices, creating a broad-based inflationary effect. For investors, this positions India as a key “transmission economy,” where external shocks rapidly cascade across energy, agriculture, manufacturing, and trade systems.

ALSO READ: India’s Crude Oil Tracker 2026: Supply Diversification and Energy Security Measures

US-Israel war in Iran and Gulf disruptions: What this means for investors and businesses

• Map hidden dependencies: Identify exposure to ammonia, urea, helium, and petrochemicals — not just oil and gas
• Diversify sourcing: Reduce reliance on single-region inputs
• Reassess inventory strategies: Buffer critical materials with low substitutability
• Monitor second-order risks: Food inflation, semiconductor delays, and industrial slowdown

(With inputs from Archana Rao.)

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