The Slow Burn: Why the Hormuz Crisis Will Hurt Long After the Guns Go Silent

Over the past few weeks, I have been fielding calls from senior executives, board members, and government officials asking me the same question in different ways: When does this end?

My honest answer: the kinetic part may end. The economic consequences will not, not for years. And most of them are not fully here yet.

I was recently invited to lead a series of crisis leadership masterclasses for a number of public listed companies and federal agencies who are already beginning to stress-test their decision-making frameworks against the scenarios now unfolding. The requests came before the ceasefire talk, before the dual blockade, before the Islamabad talks collapsed. These organisations saw it coming before most commentators did. That kind of situational awareness is rare. It is also the difference between managing a crisis and being consumed by it.

But this article is not about my work. It is about what is coming for the rest of the world, whether you have prepared for it or not.

The moment I knew this was different

On Friday, 17 April, the Strait of Hormuz briefly reopened. If you look at the marine traffic maps from that day compared to the days before and since, the difference is stark. In the first image, taken during the partial opening, you can see commercial vessels moving through the strait in a narrow, supervised corridor — coordinated with and approved by the Iranian Revolutionary Guard Corps. In the second image, taken after the US announced its naval blockade on 18 April, the strait is essentially empty. What looked like cautious movement became frozen stillness within 24 hours.

That brief reopening told me everything I needed to know about the state of negotiations. Iran was demonstrating what compliance on their terms looks like. Trump responded with an escalation instead of an acceptance. The Islamabad talks, which had been Iran’s clearest signal that a framework was available, collapsed the same weekend. Iran had made its position plain throughout: the 10-point plan was non-negotiable. What followed was a dual blockade — Iran blocking the Gulf, the US blockading Iranian ports — that has now pushed the global economic system past a threshold most forecasters had treated as a severe-but-unlikely scenario.

We are in that scenario now.

Radiation sickness. Not a bomb.

The best way I can describe what is happening to the global economy is this: think of a nuclear blast. The people closest to the explosion die quickly. But many others survive the initial blast only to be killed over the following days and weeks by radiation they cannot see, cannot taste, and cannot fully comprehend until the damage is already irreversible.

The global supply chain disruption caused by the Hormuz closure is the radiation, not the blast. The blast happened on 28 February when the war started and the strait effectively closed. Most of the world watched oil prices spike and assumed they understood the situation. They did not. The full consequences of this disruption will not arrive in a single news cycle. They are arriving now, in increments, and they will continue arriving for years.

Let me walk through exactly why.

Ships can physically pass. But they won’t.

The Strait of Hormuz was not permanently closed in the traditional sense. It became economically closed: physically accessible in theory, but commercially non-functional due to collapsed insurance markets and entrenched operator risk aversion. As Cyril Widdershoven, Senior Advisor at Blue Water Strategy, observed in analysis published by OilPrice.com on 25 April 2026, none of the world’s top shipping companies were willing to take cargo through the strait even during announced reopening windows.

The World Bank’s April 2026 economic update confirmed the scale of the collapse: between March 2 and March 22, an average of just five ships per day crossed the strait, compared to 96 over the same period a year prior — a 95% decline.

UNCTAD’s rapid assessment put it plainly: ship transits dropped from around 130 per day in February to just 6 in March. The strait carries 20% of the world’s oil and LNG flows. The disruption hit a large share of global supplies, with immediate consequences for production, trade, and consumption worldwide.

War-risk insurance premiums exploded from approximately 0.125% to between 0.2% and 0.4% of hull value per transit. Many insurers cancelled Gulf coverage entirely. Tankers and crews were scattered globally. Rerouting around Africa became standard practice. Rebuilding confidence, renegotiating contracts, and recalling experienced crews does not happen because a ceasefire is announced. It takes months.

Larry Johnson, the former CIA officer and intelligence analyst, cut through this cleanly in his interview with Mario Nawfal: “The US doesn’t have enough ships deployed to actually do an effective blockade… and the entire premise of a blockade is nonsensical because you have people in the Trump administration who really think that if we just do this blockade it’s going to put so much economic pressure on Iran that they’re going to have to cave. Has anyone paid attention to Cuba over the last 66 years? We’ve had a pretty effective blockade on Cuba and yet they’re still standing — and they don’t have any of the advantages that Iran does.”

He continued: “Iran is being firm. We know what we want. We’ve told you what we want. If you’re serious about doing this, let’s go forward.”

The economic pressure, Johnson made clear, is not running in one direction. It is running toward the global economy.

What the IMF is actually saying — and what sits behind the numbers

The IMF’s April 2026 World Economic Outlook laid out three scenarios. In the reference forecast — which assumes a short-lived conflict and a moderate 19% increase in energy commodity prices — global growth still falls to just 3.1% and headline inflation rises to 4.4%. In the adverse scenario, with sharper energy price increases and tightening financial conditions, growth falls to 2.5% and inflation climbs to 5.4%. In the severe scenario, where energy supply dislocations extend into 2027, global growth falls to 2% both this year and next, while inflation exceeds 6%.

IMF Chief Economist Pierre-Olivier Gourinchas was direct at the Spring Meetings press briefing: “The closing of the Strait of Hormuz and serious damage to critical energy facilities in the Middle East raised the prospect of a major energy crisis, should a durable solution not be found soon. Oil and gas prices have increased sharply and so have the prices of diesel and jet fuel, fertilizer, aluminum and helium. The overall impact will depend on three channels. First, higher commodity prices are a textbook negative supply shock: raising prices and costs, disrupting supply chains, and eroding purchasing power.”

Babak Hafezi, professor of international business at American University, told Al Jazeera: “For every $10 sustained increase in gas prices per barrel, we should expect a decrease in GDP growth of about 0.4%. Meaning, a sustained $60 increase above the average price would put the US firmly in recession territory.”

Professor Steve Hanke, professor of applied economics at Johns Hopkins University, gave perhaps the starkest assessment in the same broadcast as Larry Johnson. He noted that the director of the US Office of Management and Budget, when asked under Congressional testimony how much the Iran war was going to cost, said he had no idea. Hanke’s point was not subtle: “The cost of the Afghan adventure was $6.5 trillion in total. The direct costs of the Iraq war were 50,000 times greater than the initial projection of 50 to 60 billion. If it continues, the number for global growth would go pretty close to zero or maybe even negative. It would be a catastrophic thing.” And then he said something every CEO and finance minister needs to write on the wall: “Economics always runs the show at the end.”

He is right. And the economic clock in this crisis is running faster than the diplomatic one.

The Ras Laffan wound that will not close

Most commentary has focused on oil prices. That is the visible wound. The deeper one is Qatar’s Ras Laffan Industrial City.

Ras Laffan is not merely a gas processing plant. It is the single largest LNG hub on earth. Iranian missile strikes in March 2026 knocked out 17% of Qatar’s LNG export capacity — 12.8 million tonnes per year. QatarEnergy’s CEO has stated repairs will take three to five years, partly because key components such as turbines are highly specialised and simply cannot be ordered and installed quickly.

This facility also produces the majority of Qatar’s helium output — a byproduct of natural gas processing — and is deeply connected to urea and ammonia production. Oxford Economics modelled the prolonged scenario: global inflation hitting 7.7%, the world tipping into “outright contraction,” advanced economies including the US sliding into recession, China’s growth slumping to 3.4%, and Gulf states seeing GDP fall by more than 8% in 2026. Oxford Economics described it as “the worst synchronised downturn in 40 years outside the pandemic and the global financial crisis.”

What makes Ras Laffan different from an oil field disruption is the repair timeline. Oil wells can restart in weeks. A destroyed LNG hub’s critical components cannot be sourced, fabricated, transported, and installed in anything under three to five years. The global maritime and energy system is entering a phase of structural fragmentation that will define trade economics across the coming decade, with regionalisation of energy flows, redundancy prioritised over optimisation, and permanently higher cost structures embedded across energy, shipping, and manufactured goods pricing.

Food. The crisis most leaders are not talking about yet.

The UN has warned that up to one-third of global trade in fertiliser raw materials passes through the Strait of Hormuz. Ammonia and nitrogen shipments are already constraining supply at a critical time. In Bangladesh, state-run fertiliser factories have shut down, disrupting domestic production during the winter rice season. In Nepal, diesel — the primary fuel for lorries and heavy machinery — has risen sharply. UN estimates warn that 9.1 million additional people in Asia could face acute food insecurity if the crisis persists. The timing coincides with key crop planting windows.

The Gulf region supplies between 45% and 46% of global seaborne urea. Shortages have already forced plant shutdowns in India, Bangladesh, and Pakistan. Farmers facing higher costs and uncertain access to fertilisers are planting less. The food price spike that results from reduced planting in 2026 will not show up on grocery shelves until 2026 and into 2027. That is the radiation again, arriving weeks and months after the initial blast.

This is not speculative. It is agricultural chemistry. When you cut fertiliser supply during planting season, you cut yields six months later. When you cut yields, you raise prices. When you raise prices in food-import-dependent countries across Asia and Africa, you create the conditions for social instability. None of that appears in current GDP forecasts because it has not happened yet.

Helium: the supply chain nobody planned for

I want to spend a moment on helium because it is perhaps the least-discussed consequence and potentially one of the most consequential.

Qatar supplies between 30% and 33% of global helium production. Helium is not used for party balloons. It is the cooling agent for superconducting magnets in MRI machines. It is essential for the fabrication of semiconductor chips. Without helium maintained at near-absolute-zero temperatures, chip manufacturing stops. Fiber optic production slows. Aerospace instrumentation fails. Healthcare systems that depend on MRI capacity face extended delays.

The Ras Laffan damage means this supply will not normalise for three to five years. The semiconductor industry, already structurally constrained, now faces a years-long helium squeeze on top of every other pressure. The phones we carry, the data centres that run our economies, the medical equipment that keeps patients alive — all of them depend on supply chains that trace back, in part, to a facility in Qatar that is currently inoperable.

Ambassador Freeman’s assessment — and what it means for everyone else

Ambassador Chas Freeman — who served as US Assistant Secretary of Defense in the 1990s, as US Ambassador to Saudi Arabia under George H.W. Bush, and most relevantly as the principal American interpreter for Nixon’s historic 1972 visit to China — offered what I thought was the most clearheaded strategic reading in the entire Mario Nawfal broadcast. He said: “Iran has achieved many of its objectives. It now controls the Strait of Hormuz… This was not a negotiation. This was the American presentation of an ultimatum backed by nothing, since Iran has not conceded and wars never end until the defeated admit defeat. Nobody is prepared to admit defeat.”

He also observed that the war’s precedent has implications far beyond the strait: “Iran has now sent a precedent. If Iran can control the Strait of Hormuz unilaterally, China can take the Taiwan Strait and do the same.”

Freeman’s reading of China’s strategic position is important. He described Beijing as the party that rose to prosperity and strength within the American-sponsored world order — and therefore as a party with a genuine stake in preserving it, not in seeing it dismantled through conflict. But he also noted that within the People’s Liberation Army, there are those who view Iran’s closure of Hormuz as a live demonstration of what China could do with the Taiwan Strait. Two simultaneous conclusions, both credible, both running inside the same government.

That is the kind of strategic ambiguity that makes supply chain risk assessment genuinely hard. And it is why scenario planning for “the war ends next week and everything returns to normal” is not adequate crisis preparation for any organisation that touches global trade.

Aaron David Miller, who was part of the Oslo Accords negotiations and the Camp David Summit, put the trust deficit plainly: “There’s no trust, no confidence. Twice now the Trump administration has signaled its interest in negotiations and it has been a cover and a mask for war.” He identified the core structural problem in the talks: Iran went to Islamabad with a technical team of approximately 70 people, ready to negotiate. JD Vance went as a vice president who had no authority to conclude anything, calling Trump repeatedly throughout the sessions.

That is not a negotiation. It is theatre with economic consequences that are entirely real.

The assumption that has collapsed

The globalisation model was built on the assumption of frictionless maritime transit through stable chokepoints. Since February 2026, that assumption has been empirically invalidated. The private sector has already internalised this paradigm shift. Shipping lines, energy traders, and financial institutions are no longer pricing risk based on stability assumptions. They are pricing volatility as the baseline condition. That shift has profound and durable economic consequences for every participant in global trade.

John P. Ruehl, writing for Asia Times on 24 April 2026, put it plainly: “While US sea primacy was never absolute, letting the system dissolve without a credible alternative will undermine global stability.” In April, US forces initiated a direct blockade by seizing an Iranian-bound container ship. Iran retaliated by seizing two vessels shortly thereafter. Maritime traffic plummeted. Despite the US establishing a $40 billion insurance fund to stabilize trade, soaring costs and contradictory official signals kept commercial vessels away.

The IEA has called this the largest supply disruption in the history of the global oil market. The ECB has postponed planned rate cuts and raised inflation forecasts. UK inflation is expected to breach 5% in 2026. Germany’s GDP growth forecast has been cut to 0.6%. European chemical and steel manufacturers have imposed surcharges of up to 30% to offset surging electricity and feedstock costs. UNCTAD warns that 3.4 billion people live in countries already spending more on debt servicing than on health or education — populations with essentially no cushion to absorb what is coming.

What leaders must understand right now

I have spent weeks in rooms with senior executives and government officials who are intelligent, motivated, and well-informed. Most of them are asking the wrong questions. They are asking “when does Hormuz reopen?” They should be asking “what do we do if it doesn’t reopen for two more years, and what do we do if it does reopen but Ras Laffan doesn’t recover for five?”

The difference between those two questions is the difference between reaction and preparation.

The organisations that called me before the ceasefire did so because they understood something fundamental: crises in a VUCA environment — volatile, uncertain, complex, ambiguous — do not announce themselves clearly. They arrive as a series of signals that decision-makers are usually too busy to connect until the pattern becomes undeniable. By then, the window for pre-emptive action has closed.

The Hormuz crisis is not a single event. It is a supply shock layered on a logistics shock layered on an insurance market shock layered on a fertiliser shock layered on a helium shortage — all of them operating on different timelines, all of them compounding. Steve Hanke is right that economics runs the show at the end. But leaders who wait for the economics to force their hand will be leading from behind. The organisations already stress-testing their supply chains, their energy exposure, their financing structures, and their scenario plans are the ones that will come out of this positioned rather than paralysed.

The global economy will not snap back when someone signs a piece of paper in Islamabad or Geneva or wherever the next talks collapse. It will recover incrementally, unevenly, and over years. Some disruptions — particularly Ras Laffan’s helium and LNG output, and the shipping industry’s collapsed confidence in Gulf routes — will take the rest of the decade to fully normalise, if they ever do.

The radiation is in the system. The question is whether your organisation, your supply chain, and your leadership team know it — and have a plan for what comes next.

I run a 4-hour Crisis and Risk Leadership Masterclass — a structured, scenario-driven session on decision-making under conditions of acute uncertainty and strategic ambiguity. In recent months, this programme has been delivered to boards of public listed companies, federal agencies, and government departments across the region. If your organisation is beginning to ask the harder questions about what this crisis means for your people, your supply chains, your stakeholders, and your strategic positioning — feel free to reach out directly at mohdprasad.hanif@darulhaq.com.my.

Sources: IMF World Economic Outlook — “Global Economy in the Shadow of War,” April 2026; IMF Spring Meetings Press Briefing transcript, April 14, 2026; World Bank — Middle East, North Africa, Afghanistan and Pakistan Economic Update, April 2026; UNCTAD — “Hormuz Disruption Deepens Global Economic Strain,” rapid assessment, 2026; UN News — “Despite Ceasefire, Hormuz Tensions Continue to Throttle Supply Chains Worldwide,” April 2026; Oxford Economics — Prolonged Iran War scenario, April 2026; Al Jazeera — “IMF Cuts Global Growth Forecast During Hormuz Blockade,” April 14, 2026; FoodNavigator — “Hormuz Crisis Sparks Inflation Shock for Global Food and Drink,” April 2026; OilPrice.com / Discovery Alert — Strait of Hormuz Shipping Disruption analysis, April 25, 2026; Asia Times — John P. Ruehl, “Global Shipping Order May Never Recover From Hormuz,” April 24, 2026; Mario Nawfal broadcast — Larry Johnson, Professor Steve Hanke, Ambassador Chas Freeman, Aaron David Miller.