How the 2026 Middle East War Is Redrawing Trade Routes and Reshaping the Gulf

On the morning of February 28, 2026, the world woke up to a different Middle East.

US and Israeli forces launched coordinated strikes on Iran — targeting military

infrastructure, nuclear facilities, and government buildings in what Britannica

describes as one of the most significant military operations in the region since

the 2003 invasion of Iraq. Within hours, Iran's Islamic Revolutionary Guard Corps

was broadcasting warnings across maritime radio channels. Vessel traffic through

the Strait of Hormuz — the narrow waterway through which roughly 20% of the

world's oil flows every single day — fell by approximately 70%. Seventeen days later, the war is reshaping two of the most fundamental forces in

modern life: where goods move and where people choose to live. This post

breaks both down with the numbers that matter.

The Supply Chain Earthquake

The Strait of Hormuz: The World's Most Dangerous Bottleneck

The Strait of Hormuz is 21 miles wide at its narrowest point. That 21 miles of

water sits between Iran to the north and Oman and the UAE to the south. Through it

passes not just oil and gas, but fertilizers, petrochemical feedstocks, plastics,

pharmaceuticals, and containerised goods serving billions of people across Asia,

Europe and beyond.

According to a 2025 UNCTAD report, the Strait facilitates 11% of all global

maritime trade by volume — while more than 30 million TEUs of containerised port

traffic pass through the surrounding region annually. Since the opening strikes on

February 28, the strait has been functionally impaired. Iran formally closed it to

enemies. By Day 3, nearly 170 container ships were trapped or waiting at

anchor in the Persian Gulf. By Day 12, the UK Maritime Trade Operations (UKMTO)

had recorded 16 attacks on commercial shipping since hostilities began.

Lloyd's List Intelligence described conditions in and around the strait as

"maximum disruption." Where does oil prices stand?

Brent crude prices jumped roughly 15% in the first days of the conflict, briefly

surpassing $120 per barrel as markets priced in the risk of sustained disruption.

The World Economic Forum notes that in a worst-case scenario, some analysts have

modelled prices reaching $150 or higher.

This matters far beyond petrol stations. Oil price is the hidden tax buried inside

every manufactured product, every delivery van, every cargo ship on earth. When

oil spikes, **transportation costs surge across trucking, aviation, and ocean

freight simultaneously**. Manufacturing sectors that rely heavily on energy —

metals, chemicals, plastics — feel immediate cost pressure. The global aluminium

market saw supply constraints push prices to multi-year highs within days of the

conflict starting.

As KPMG's energy strategy leader put it: "This is a supply shock with an uncertain

timeline when the critical variable is duration. Businesses should be stress

testing for both short and long-term disruption."

Dubai's Jebel Ali: The Hub That Got Hit

Dubai's Jebel Ali port is the largest port in the Middle East and one of the

busiest container terminals in the world — handling tens of millions of TEUs

annually and serving as the logistics backbone for the entire Gulf region. It sits

approximately 100 kilometres across the water from Iran.

On March 1, 2026 — Day 2 of the war — DP World confirmed that operations at Jebel

Ali had been suspended following a fire caused by what it described as "aerial

interception." A plume of smoke rising from the port was photographed from a

passing yacht in Dubai Marina and circulated globally.

Across the region, port closures cascaded. Salalah in Oman suspended operations on

March 11 after vessel attacks. APM Terminals in Bahrain halted operations at

Khalifa Bin Salman Port on March 12–13 on government advice. Al Shaheen Terminal

in Qatar and Al Ruwais were restricted. The GCC's vaunted port infrastructure —

built over decades to handle the world's goods — was under direct threat.

The Aviation Headache

The impact on air freight was equally severe. Supply Chain Magazine reported that

nearly one-fifth of global air cargo routes faced delays as airlines avoided

conflict zones and rerouted flights. FedEx issued a service alert suspending

flights to and from 11 Middle Eastern countries simultaneously — Bahrain,

Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Qatar, UAE, and Saudi Arabia.

Emirates SkyCargo suspended flights entirely and placed temporary restrictions on

accepting new shipments. Dubai International Airport — the world's busiest

international cargo hub by tonnage — suffered multiple disruption events. On March

16 alone, a drone struck a fuel storage tank near the airport at 04:00 local time,

forcing a 7-hour flight suspension. The UAE's General Civil Aviation Authority

subsequently announced a full temporary closure of UAE airspace as a

"precautionary measure."

Cirium, the aviation analytics firm, reported that more than **23,000 of the

roughly 44,000 flights** scheduled to operate across the Middle East during the

first two weeks of the war had been cancelled.

What This Means for Global Industry — Sector by Sector

Technology and Semiconductors

Just-in-time delivery for microchips and consumer electronics is built on the

assumption of frictionless logistics. That assumption has collapsed. EV batteries and semiconductors destined for 2026 production lines are stranded in the Gulf.

Reports emerged of latency spikes at Microsoft Azure and AWS Middle Eastern nodes

following missile strikes near Dubai and Doha data infrastructure.

Agriculture and Food

The Strait of Hormuz blockage directly threatens nitrogen fertiliser exports —

critical for Northern Hemisphere spring planting, which begins in March and April.

The Middle East imports approximately 85% of its food. With air bridges being

prioritised for military and medical freight over perishables, GCC populations

face mounting food security concerns. Qatar's halted LNG and food tanker

departures are particularly acute — internal storage facilities were estimated to

reach capacity within weeks, risking production shutdowns.

Pharmaceuticals

Pharmaceutical ingredients that move through Gulf maritime routes are now delayed.

Analysts warned that prolonged disruption could increase prices for drugs globally

— hitting the world's most vulnerable populations hardest.

Automotive

With 16 vessels hit in the Strait since Day 1, automotive supply chains — which

depend on just-in-time parts delivery — are exposed. The global aluminium and

steel inputs for vehicle manufacturing are caught in the same logistical gridlock. The Cape of Good Hope Diversion — Again

For shipping lines, the only viable alternative to the Strait of Hormuz and the

Red Sea is the long way around Africa via the Cape of Good Hope. This adds **10 to

14 days** to voyage times and increases costs by 30 to 40%. It also absorbs

significantly more fuel per journey, compounding the oil price pressure on the

industry.

What was already an established crisis — the Red Sea disruptions caused by Houthi

attacks, which had been ongoing since December 2023 — has now combined with Hormuz

closure to create an unprecedented dual-corridor crisis. Sea-Intelligence's Alan

Murphy stated that the attack on Iran "will result in further weaponization of

trade and shatter hopes of a large-scale return of container shipping to the Red

Sea in 2026."

Before the war, average spot freight rates from China to North Europe were already

48% above pre-Red Sea crisis levels. Rates from China to the Mediterranean

were 79% higher. The war will prevent any meaningful rate normalisation in the

near term.

The Human Displacement Crisis[H3] Dubai's Expat Exodus

Dubai is home to approximately 240,000 British expatriates — along with

hundreds of thousands more from India, Pakistan, the Philippines, the United

States, France, Germany, and across the world. For years, the city has marketed

itself on safety, stability, and opportunity. That narrative has been tested

severely in the past three weeks.

On March 6, a government alert was issued to residents to evacuate a public area

while a restaurant was still in service. On March 16, a drone struck a fuel

storage tank near Dubai International Airport. Intercepted missiles and drones

have been audible at night across the city. Several major international banks —

Goldman Sachs, Citi, Standard Chartered — ordered staff to work from home or

pulled employees from their Dubai offices entirely after Iran stated it would

target countries hosting US military allies.

As CNN observed: "Only around 100 kilometres of water separate Iran and the UAE.

Missiles and drones do not take long to reach Emirati shor