The Strait of Hormuz: Much More Than an Oil Crisis
Since the closure of the Strait of Hormuz at the beginning of March, everyone has been watching the price of oil. It's understandable—it's visible, it's immediate. But what nobody tells you is that this closure is triggering, in parallel, three other silent crises whose effects we'll feel in the coming months: a sulfur crisis, a helium crisis, and a semiconductor crisis.
And these three crises affect everything: your batteries, your smartphone, AI servers, and the energy transition. Everything.
Why the Strait of Hormuz Is Not Just About Oil
The Strait of Hormuz is a 33-kilometer-wide strip of sea between Iran and the Sultanate of Oman. Yet, 50% of global maritime trade passes through it. That's two and a half times the 20% of oil everyone talks about.
What moves through this strait is oil, yes. But also liquefied natural gas (LNG) from Qatar, sulfur extracted from Gulf crude oil, and by extension all the metals and materials that depend on these two upstream resources.
When the strait closes, it isn’t just one link in the chain that breaks. It’s a central knot that causes several chains to fall at once.
Sulfur: The Byproduct That Keeps the World Running
What It Is
Most people have never heard of sulfur. Yet, it is the most produced chemical in the world, in the form of sulfuric acid.
Here’s how it works: when you produce oil, you inevitably produce sulfur. It's a chemically inescapable byproduct of refining. This sulfur is transformed into sulfuric acid, which is then used to extract metals from ore: copper, cobalt, nickel. These metals are used for batteries, electric cars, and electric grids.
The complete chain looks like this:
| Step | Product | End use |
|---|---|---|
| Oil refining | Raw sulfur | Inevitable byproduct |
| Chemical processing | Sulfuric acid | #1 chemical worldwide |
| Mining extraction | Copper, cobalt, nickel | Batteries, electric grids |
| Assembly | Lithium-ion batteries | Electric cars, energy storage |
Geographical Concentration
According to the International Energy Agency, the Middle East produces 44% of the world’s sulfur. And 50% of this resource’s trade passes through the Strait of Hormuz.
The concrete problem is Indonesia. This country produces 50% of global nickel consumption, and for nickel extraction, its factories need sulfuric acid. However, Indonesia imports 75% of its sulfur from the Persian Gulf.
Since the strait’s closure, these factories have been running on their stocks. And those stocks aren't new.
Warning Signs
South Korea, whose major chemical operator declared force majeure this week, is a clear example of how fast this market is deteriorating.
China, the world’s top sulfur importer, had stockpiled just under 2 million tons in its ports before the conflict. Enough for about a month and a half. That buffer is now running down.
Semiconductors: The Most Fragile Supply Chain
TSMC and Hidden Dependency
TSMC is the chip factory located in Taiwan that produces 90% of the world’s semiconductors. These chips power iPhones, AI servers, and even American missiles. This one factory consumes 9% of all electricity in Taiwan.
The problem: Taiwan generates most of its electricity from liquefied natural gas. And a third of that LNG comes from Qatar. Which obviously passes through the Strait of Hormuz.
| Resource | Hormuz Dependency | Available stocks | Impact |
|---|---|---|---|
| Qatari LNG | 1/3 of Taiwan’s LNG | 10-11 days | TSMC electricity |
| Helium | 1/3 of global use | A few weeks | Equipment cooling |
If LNG does not arrive, Taiwan's gas reserves are estimated to last 10 to 11 days. That’s ten days for the plant that makes nearly all the world’s chips.
Helium: The Most Overlooked Issue
Helium is a byproduct of liquefied natural gas processing. It is essential to chip manufacturing: it cools the equipment to minus 168 degrees Celsius, necessary for photolithography.
Qatar accounts for a third of global helium consumption. Qatar Energy declared force majeure at the start of the conflict, after its facilities were hit.
What makes this problem so hard to absorb is that helium evaporates and can’t be easily stored. The cryogenic containers needed to ship it take weeks to be repositioned. The world leader in the sector has already told CNBC that a return to normal is hard to imagine in less than 4 to 6 months.
Why the Markets Haven’t Reacted Yet
That’s the obvious question. If this is so serious, why aren’t prices moving?
The answer is simple: financial markets live in the present. They only price what can be measured immediately. Oil goes up instantly because everyone sees gas prices rise. Inflation, central bank forecasts, interest rates: there’s already enough to handle.
Sulfur, helium, fertilizers: the effects will only show up in 3 to 6 months. Markets haven’t yet priced the cost of bread or your next smartphone into today’s prices.
That’s how modern supply chains work. Everything is connected, but the timing of shocks varies. This creates windows of opportunity for those looking ahead.
What This Means in Practice
Timeline of Impacts
| Timeframe | Sector affected | Concrete manifestation | Already priced in? |
|---|---|---|---|
| Immediate | Oil | Pump prices, energy inflation | Yes |
| 3 to 6 months | Sulfur, fertilizers, nickel | Food prices, metals for batteries | No |
| 6 to 12 months | Helium, semiconductors | Smartphones, AI servers, defense | No |
| Long term | Energy transition | Battery costs, electrification delays | No |
Sectors to Watch
Markets are currently focused on oil prices. That means some directly exposed sectors haven’t moved yet:
Alternative mining companies. Copper, cobalt, and nickel miners outside the Gulf are likely to become more competitive if sulfur shortages hit Indonesian or Philippine plants.
Helium producers outside the Gulf. The U.S., Russia, and Algeria produce helium independently from Qatar. With structural demand driven by semiconductors, these players will be under pressure to deliver.
Green fertilizer manufacturers. Companies like Yara International are already investing in green ammonia plants based on hydrogen. This technology makes it possible to eliminate sulfur from nitrogen fertilizer production. This could be the next wave.
Cryogenic container manufacturers. Helium requires highly specialized logistics. Transport capacity will become a critical bottleneck in the next few weeks.
Main Takeaways
In a crisis, there’s what you see right away—and what you don’t see yet.
What you see: oil at $100, inflation, responsive central banks.
What you don’t see yet: a sulfur shortage that will slow nickel production, a helium deficit that will weaken chip factories, LNG reserves in Taiwan that last ten days, and a global food chain dependent on fertilizers whose output will be squeezed.
This isn’t just about oil. It’s about chemistry, semiconductors, and modern supply chains where everything is connected.
If this conflict continues, we will talk about it again—count on it.
