The current Middle East conflict is already creating immediate uncertainty for supply chains. Critical maritime chokepoints including the Strait of Hormuz, Bab-el-Mandeb, the Red Sea corridor, and the Suez Canal form the backbone of these trade flows. Any disruption in these routes immediately increases transit times, freight costs, and insurance premiums. For airfreight the region has become particularly hazardous as expected with planes being diverted. For traders operating on tight margins, that combination is dangerous.

Traders will be hit with rising costs and new risks – depending on how long the conflict lasts.

Here are just some of the challenges:

Shipping disruptions and route diversions

Major shipping lines have rerouted vessels via the Cape of Good Hope to avoid high-risk zones. While this ensures safety, it adds:

• Days of additional transit time
• Significant increases in nautical miles per voyage
• Higher bunker fuel consumption

Services connecting the Middle East, have either been suspended or restructured. Air cargo operations have also been disrupted, with flight cancellations and temporary shutdowns of key regional hubs.

For traders, this translates into:

• Delayed shipments
• Contractual penalties
• Working capital blockage
• Customer dissatisfaction

Freight and Insurance Costs

Freight rates have surged sharply compared to pre-conflict levels. Containers that previously cost $1,200–1,800 per TEU on certain routes are now quoting significantly higher.

War risk insurance premiums have doubled and in some cases been cancelled. Insurance that once cost 0.25% of cargo value may now exceed 0.50%, with additional war-risk surcharges per voyage.

Traders should understand one hard truth: shipping companies operate on thin margins and will pass these costs down the chain. That ultimately means you, the trader, either absorb the increase or renegotiate pricing with buyers.

Sectors where margins are already slim, face serious profitability pressure.

Oil Price Volatility

Energy is the silent driver behind nearly every business cost structure.

With one fifth of the worlds oil moving through the Strait of Hormuz, any disruption can push global oil prices higher. Analysts have projected scenarios where oil could spike sharply if supply chains are severely impacted.

Higher oil prices affect:

• Transportation and inland freight
• Manufacturing input costs
• Packaging materials
• Aviation and logistics expenses

Macroeconomic consequences may include:

• Rising inflation
• Widening current account deficit
• Pressure on the pound

For energy-intensive sectors such as chemicals, paints, aerospace-linked exports, and heavy manufacturing, the cost escalation can erode competitiveness in global markets.

Payment and Banking Risks

Beyond logistics and energy, financial risk is another major concern.

Trade with Iran already operates under complex sanction frameworks and restricted banking channels.

Traders’ dependent on routes into Dubai (UAE), Qatar, Bahrain, Kuwait, eastern side or central Saudi Arabia, or other regional hubs may face additional uncertainty if those corridors are disrupted.

Escalation increases:

• Payment delays
• Settlement uncertainty
• Currency volatility risk
• Compliance scrutiny

SMEs are particularly exposed. Limited access to hedging instruments and working capital buffers makes them more vulnerable to delayed receivables.

Practical steps for traders navigating trade with the Middle East:

• Extend lead times now for ocean shipments that are exposed to Suez/Red Sea or transhipment hubs
• Budget for surcharges (war risk/security/fuel) and ask for an all-in cost scenario before booking.
• Confirm routing at booking (not just “port-to-port”), some services will quote one routing but operationally deviate.
• Review Incoterms and insurance: clarify who pays additional premiums and who decides to reroute vs. hold cargo. Consider changing from CFR/DAP to FCA
• Strengthen payment security – advance payments, Letter of Credit
• Prioritise critical SKUs: for essential components, consider split shipments (part air/part sea) to protect production continuity.
• Check your Force Majeure clauses – are you covered, can this be exercised
• If you have goods in transit or ready to export, contact your customs broker, freight company or shipping agent to confirm impacts, timeframes and any emerging risks. Ensure you also remain in contact with your customers/suppliers to manage expectations.
• Continued disruption may have an impact on shipping rates and the availability of shipping containers. Contact your freight company and review your sales contracts and insurance policies to ensure you’re prepared for current and future impacts.
• Look to diversify into other markets – engage with our Around the World sessions
  • Bulgaria Webinar 11 March (1200 to 1300). Register in advance for this meeting: https://us02web.zoom.us/meeting/register/IYfgE17iTIi1PjfcmpdRDQ
  • Singapore Webinar 23 April (0900 to 1100). Register in advance for this meeting: https://us02web.zoom.us/meeting/register/jdvaccXNRMGhjpHI24XHRA
  • Morocco Webinar 18 May 2026 (1300 to 1400) Register in advance for this meeting: https://us02web.zoom.us/meeting/register/H9KZtUZLT1mWFxp2ynsh1A

The Middle East conflict is not just a regional event; it’s a global trade disrupter.

We hope the above helps, and whilst geopolitical instability is unpredictable, strategic preparation is entirely within your control.

For more information contact: 01254 945903 international@chamberelancs.co.uk