The Hormuz crisis is about much more than oil

The Western public has been conditioned to think of energy crises in terms of petrol prices and heating bills. When the Strait of Hormuz effectively closed to commercial shipping in early March 2026, the initial reaction followed the familiar script: Brent crude surged past $90 a barrel, commentators warned of pain at the pump, and governments began releasing strategic petroleum reserves. What has received far less attention is that the Hormuz closure is not primarily an oil story. It is a story about fertiliser, food, industrial chemistry, jet fuel, and the accelerating collapse of Europe’s already diminished capacity to sustain itself as a serious economic power.

The oil dimension is dramatic enough on its own terms. The benchmark freight rate for Very Large Crude Carriers shipping from the Middle East to China hit an all-time high of $423,736 per day, an increase of more than 94 per cent in a single trading session. Major marine insurers, including Norway’s Gard and Skuld and Britain’s NorthStandard, have cancelled war risk cover for vessels operating in the Persian Gulf. Maersk, MSC, CMA CGM, and Hapag-Lloyd have all suspended transit bookings. Over 150 tankers sit anchored in open Gulf waters, unable to move. The rerouting of traffic around the Cape of Good Hope adds ten to fourteen days and thousands of nautical miles to every voyage, with costs that cascade through every supply chain those vessels serve. But oil, at least, has substitutes, alternative suppliers, and strategic reserves. The same cannot be said for what else passes through that 21-mile-wide waterway.

Consider jet fuel. Approximately 30 per cent of Europe’s jet fuel supply originates from or transits through the Strait of Hormuz. Middle Eastern refineries had been sending some 470,000 barrels of aviation kerosene per day through the strait to airports across Europe and Asia. That supply has effectively stopped. The consequences are already visible: Jet fuel prices have surged from $85–90 per barrel before the crisis to between $150 and $200, depending on the regional market. In the United States, the Argus Jet Fuel Index climbed from $2.11 per gallon in January to $3.40 by March 10, a gain of more than 60 per cent. Airlines from Qantas to SAS to United have announced surcharges and fare increases. For a European aviation sector already operating on margins of less than four per cent, this is not a temporary inconvenience. It is an existential squeeze.

The fertiliser dimension is, if anything, more consequential. Approximately one-third of globally traded urea transits the Strait of Hormuz. The Middle East collectively exports 21 to 22 million tonnes of urea annually, accounting for roughly 40 per cent of global seaborne trade in the commodity. Some 22 per cent of global finished phosphate fertiliser exports and 45 per cent of sulphur exports pass through this waterway. QatarEnergy’s suspension of operations at its Ras Laffan and Mesaieed facilities has halted not only LNG production but also roughly 3.8 million tonnes per year of sulphur output. Urea prices at the New Orleans fertiliser hub have already risen from $475 to $680 per metric tonne. The timing is potentially catastrophic: Northern Hemisphere spring planting is imminent, and the window for fertiliser application is closing.

For Europe, this compounds a structural crisis that was already well advanced. During the 2022 energy shock, roughly 70 per cent of European nitrogen fertiliser production capacity was curtailed as gas prices surged. What was presented as temporary has become permanent. Europe’s chemical industry has lost 37 million tonnes of production capacity and 20,000 direct jobs since 2022, with annual new capacity investment collapsing from 2.7 million tonnes in 2022 to just 0.3 million tonnes by 2025. The continent that once led the world in industrial chemistry now cannot produce its own fertiliser at competitive cost. And it cannot simply import what it no longer makes, because the world’s largest fertiliser export routes now pass through a war zone. The dual chokepoint crisis — Hormuz effectively closed, the Red Sea imperilled by renewed Houthi threats — means that global fertiliser supply has no easy rerouting option.

What connects these seemingly disparate threads — super tanker freight rates, aviation kerosene, urea granules — is a single underlying reality: Europe’s two decades of energy policy have not merely made the continent less competitive. They have made it structurally fragile. Germany enters this crisis with gas storage at 20.6 per cent. The Netherlands stands at 10.7 per cent. The EU has committed to banning Russian LNG imports under short-term contracts from late April 2026 and pipeline gas by September 2027. The bloc that voluntarily severed its cheapest energy artery is now watching its replacement supply route close under military fire. As Václav Smil has tirelessly explained, modern civilisation rests on four material pillars: Artificial fertilisers, cement, plastic, and steel. All four require energy-intensive processes. A continent that deliberately makes energy expensive is a continent that has chosen, whether it admits it or not, to stop making these things.

Chancellor Merz’s €500 billion investment plan represents a belated recognition that something has gone badly wrong. Whether it represents an actual change of direction is another question. A government that simultaneously promises to reindustrialise and to meet its 2030 climate targets is a government that has not yet understood that these two objectives, under present technological constraints, are mutually exclusive. You cannot run a steel mill on solar panels that deliver electricity 11 per cent of the time. You cannot feed a continent when you have outsourced both your fertiliser production and the shipping lanes it depends on.

The Hormuz crisis has laid bare what the data has been saying for years: European deindustrialisation is not an economic adjustment but a civilisational choice, and the bill is now arriving in forms that its architects never anticipated — not merely in the price of a barrel of crude but in the cost of feeding, flying, and sustaining an entire continent that has methodically dismantled its own capacity to do any of these things independently.