'Big concern': How the Iran war and Strait of Hormuz closure could drive up prices for helium, fertilizer and other goods
The strait is a key waterway for supplies used by farmers and tech firms.
Gasoline prices in the United States have soared to nearly $4 a gallon since the start of the U.S.-Israel war on Iran, stoking consumer fears as the attacks prompted the closure of a critical maritime passage for oil delivery.
Yet the Strait of Hormuz facilitates transport for an array of supplies beyond oil, threatening to also drive up prices for products ranging from groceries to smartphones, some supply-chain analysts told ABC News.
Potential shortages of raw materials like fertilizer and helium could compound price hikes tied to the shortfall of oil, they added, risking a supply shock that could hammer consumers for months.
"The big concern is that petrochemicals are the foundation for a huge range of things we take for granted in everyday life. They have consequences for the entire supply chain,” Raymond Robertson, professor for trade, economics and public policy at Texas A&M University, told ABC News.
Oil prices plunged on Monday after President Donald Trump claimed "productive conversations" had been held between the United States and Iran. Still, the global price of oil stood at about $100 a barrel, which marked a steep rise from pre-war levels.
In an effort to lower oil prices, the Trump administration has announced a release from the strategic oil reserve, eased sanctions on Russian oil and suspended a key regulation of domestic oil transport. The president has also sought to restore tanker traffic in the Strait of Hormuz.
Here’s what to know about which products other than oil depend on the Strait, and what they could mean for prices.
Fertilizer
Roughly one-third of global seaborne trade in fertilizer passes through the Strait of Hormuz, though some types depend on the route far more than others, according to the United Nations Conference on Trade and Development (UNCTD).
The strait accounts for as much as two-thirds of worldwide seaborne trade in urea, a nitrogen-rich fertilizer used for a variety of crops like wheat and leafy greens, UNCTD found.
The price of urea has surged more than 40% since the outbreak of the war with Iran, Noah Gordon, a fellow in the sustainability, climate and geopolitics program at the Carnegie Endowment for International Peace, told ABC News.
The cost spike arrived during the spring planting season for farmers in the U.S. and elsewhere in the Northern Hemisphere, meaning the effects could trickle down to grocery shoppers later this year, Gordon added.
“Some of this will take time to appear. We’re headed for a big inflation shock,” Gordon said.
The American Farm Bureau Federation farmer advocacy group earlier this month urged Trump to reopen the strait.
“The U.S. risks a shortfall in crops,” the organization said in an open letter to Trump on March 9. “Such a production shock could contribute to inflationary pressures across the U.S. economy.”
Helium
A third of the global helium supply travels through the Strait of Hormuz, clogging transport of a key ingredient for the production of electronic chips. Semiconductors are a vital component of everything from washing machines to smartphones to cars.
“Helium is a critical input into electronics,” Robertson said.
The technology sector, which accounts for a sizable share of U.S. economic growth and stock market performance, depends on a reliable supply of semiconductors, Jason Miller, a professor of supply chain management at Michigan State University, told ABC News.
“The biggest concern in the tech space is a memory chip shortage,” Miller said.
An ongoing trade dispute between the U.S. and China has already raised questions about the availability of semiconductors. China is a top exporter for some rare earth elements necessary for the production of semiconductors, granting the nation leverage in negotiations with the U.S. over the terms of a trade agreement.
California-based Chip giant Nvidia has delivered major profits selling the semiconductors behind AI, becoming the most valuable company in the world by market capitalization. For now, AI has failed to deliver gains on a scale near its immense costs, putting the industry at risk in the event of further cost hikes, Miller said.
“There are concerns this could cascade to affect semiconductor production. That’s a massive concern given all the investment in the ecosystem to support AI computing,” Miller added.