By Rupak Chattopadhyay

March 9, 2026

Much of the focus on the ripple effects of the war in the Gulf has been about energy supply: Oil prices, tanker insurance, and strategic reserves dominate headlines.

But this framing misses the deeper and potentially more disruptive global consequences of a prolonged closure of the Strait of Hormuz.

This is not the 1970s, and sticker shock at the gas pump for Western consumers based on a Middle East oil-supply shock is not the biggest story.

The same global technological revolution that has contributed to the population and economic boom in the Gulf States has shifted the commodities landscape, making the economic knock-ons of a disruption in the choke point of the Strait of Hormuz potentially more far-reaching than they would have been even four decades ago.

The strait is a critical artery, not only for crude but also for the downstream industrial inputs that now underpin modern economies.

With shipping disrupted, sulfur and urea exports from Iran and Qatar—together accounting for nearly a quarter of global supply—have effectively stalled.

Sulfur is the most-produced chemical in the world, and more than 90% of it is derived from refining oil and gas. It is the key ingredient in sulfuric acid, the chemical workhorse used to extract metals such as copper and cobalt.

Without sulfuric acid, it becomes far harder to produce transformers, electric-vehicle batteries, and the semiconductor substrates that sit inside every data center on the planet.

Energy disruptions also ripple directly into the semiconductor supply chain. Qatar alone ships roughly 30 percent of Taiwan’s liquefied natural gas (LNG) through the Strait of Hormuz. Taiwan currently holds only about 11 days of reserves.

This matters globally because Taiwan Semiconductor Manufacturing Company (TSMC) produces roughly 90% of the world’s most advanced chips and consumes nearly 9% of the island’s electricity.

The closure of the Strait of Hormuz is therefore not simply an oil market story. It is a chemicals story, a semiconductor story, a food security story, and, potentially, a massive water-shortage story.

A prolonged disruption would therefore threaten not just regional energy markets, but the digital infrastructure that powers the global economy.

And yet, the most immediate systemic risk may be food.

Modern agriculture is heavily dependent on nitrogen fertilizers such as urea, and roughly one-third of global urea trade passes through the Strait of Hormuz.

Major producers—including Qatar, Saudi Arabia, Iran, and Oman—export millions of metric tonnes annually. If these flows remain interrupted, fertilizer shortages could quickly translate into higher food prices and reduced crop yields across the developing world.

Meanwhile, another danger is quietly escalating. Beyond the direct human toll of military action, attacks on desalination plants now threaten a basic requirement for survival: water.

In recent decades, development has boomed in the Gulf states largely because of innovation in desalination technology that has transformed the Gulf Cooperation Council countries from arid outposts into so-called “saltwater kingdoms”, with water supply on an equal footing with air conditioning as a socioeconomic necessity.

Approximately 450 desalination plants now supply drinking water to around 100 million people across the Gulf states. Recent strikes on facilities on Qeshm Island and in the United Arab Emirates (UAE), Bahrain, and Kuwait raise alarming questions about vulnerability of supply.

The Gulf region depends on desalination to a degree few outsiders fully appreciate. Kuwait relies on it for roughly 90% of its freshwater supply. Bahrain depends on it for around 95%, Oman for 86%, Saudi Arabia for about 70%, and the UAE for roughly 42%.

Per the Associated Press on March 8, a CIA report warned in 2010 that “attacks on desalination facilities could trigger national crises in several Gulf states, and prolonged outages could last months if critical equipment were destroyed.”

In other words, damage to desalination plants would not merely disrupt services—it could trigger a massive humanitarian crisis.

The closure of the Strait of Hormuz is therefore not simply an oil market story. It is a chemicals story, a semiconductor story, a food security story, and, potentially, a massive water-shortage story.

Focusing only on oil prices as the immediate cost hitting Western consumers risks overlooking the far broader system of industrial, agricultural, and human dependencies tied to this narrow stretch of water.

The real story lies in the cascading human consequences the world has yet to fully reckon with.

Rupak Chattopadhyay is President and CEO of the Forum of Federations in Ottawa.