The damage that could be done to global energy markets by closing the Strait of Hormuz was long anticipated (except, perhaps, in the Oval Office). Less well understood was the fact that the waterway is a vital artery, too, for chemicals, metals and fertilisers. Disruption to shipping is affecting sectors from AI and semiconductors to mining and food production, compounding the energy shock. And, as with energy supplies, upheavals could persist beyond the end of US and Israeli strikes on Iran.
Take helium. Qatar accounts for about one-third of global supplies of the gas, a byproduct of natural gas production at the vast Ras Laffan field. Not only are exports blocked through the strait but Ras Laffan’s infrastructure has suffered long-lasting damage from Iranian retaliatory strikes. This is bad news for the semiconductor industry, which uses helium to cool wafers during manufacturing; Taiwan and South Korea get the majority of their supplies from Qatar, whose high-purity helium is not easily substituted. Helium is also important for fibre optics, defence manufacturing and medical imaging (the gas cools MRI scanners).
Semiconductor manufacturing is hit, too, by the disruption to sulphur, of which the Middle East accounts for about 45 per cent of global exports. Sulphuric acid is used for cleaning wafers — and is essential, too, for mining, in the leaching of copper, cobalt and nickel. All three metals are important, in turn, for making batteries for electric vehicles — and even before the Iran conflict, tech and EV demand was creating a sulphur supply squeeze.