Helicopters Are Circling Tankers. And Your Plastic Just Got Rerated.
The neutral ship is a historical artefact. It no longer exists in the Strait of Hormuz.
- The US blockaded Iranian ports on April 13. On April 22, Iran fired on three ships and seized two in the Strait; the ceasefire is functionally over.
- War risk premiums surged again on the blockade declaration. European ethylene contracts hit a record €1,595/tonne in April, up €450 over March.
- The cascade has moved beyond oil and plastic: PCB prices up 40% in a month, urea fertilizer supply disrupted, chip production in Taiwan and Korea squeezed.
The US Navy imposed a full naval blockade of Iranian ports on April 13, targeting all ships seeking to reach Iranian ports. On April 22, Iran responded by firing on three ships and seizing two of them in the Strait. The following day, Trump ordered the US Navy to destroy any Iranian boats laying mines. The ceasefire is functionally over. We now have a dual blockade — the US blockading Iran, Iran blockading the Gulf — with commercial shipping caught between two armed forces that are each claiming authority over the same waterway.
The insurance implications are direct. War risk premiums that had eased slightly during the ceasefire surged again on the blockade declaration; oil jumped 7% immediately on the announcement. ICIS called April a record-breaking month for European polyethylene prices — European ethylene contracts settled at €1,595 per tonne, a record €450 increase over March, nearly double the previous record set after Russia invaded Ukraine.
“When a hub closes, you don't lose one route. You lose the load factor across every route that connected through it. The Strait is a hub. And the hub is closed.”
The cascading failures have now moved beyond oil and plastic. PCB prices jumped 40% in a single month as electronics factories ran out of raw materials — Goldman Sachs called it a structural shortage that cloud service providers are being forced to absorb. Fertilizer supply chains are disrupted; urea, the nitrogen fertilizer that grows a significant portion of the world's food, passes through the Strait. Chip production in Taiwan and South Korea is being squeezed by feedstock constraints. What I am watching is a system failing in sequence — not catastrophically, not all at once, but in the slow, grinding way actual systemic crises work: energy first, then plastics, then fertilizers, then electronics. Each sector absorbs the shock until it can't, then passes it on. This is exactly the mechanism Chokepoint Economics describes: geography that everyone assumed was fixed infrastructure is now a live, cascading balance-sheet risk. Saudi Arabia's East-West pipeline, the main bypass for Gulf oil, has a capacity of 5 million barrels per day; the Strait normally moves 20 million. The bypass covers 25% of the problem at best.