Strait of Hormuz Forces Inventory Increase—at a Price
Asset-light corporations are becoming asset-heavier organizations as the on-again, off-again closure of the Strait of Hormuz continues to disrupt global supply chains. During the 30 days preceding Aug. 17, an average of 16.9 ships passed through the Strait transporting 2.2 million barrels of crude and 380,000 barrels of petrochemicals, as reported by The Strait of .. The post Strait of…
The disruption of global supply chains due to the on-again, off-again closure of the Strait of Hormuz has led asset-light corporations to become more asset-heavier. In the 30 days ending August 17, 16.9 ships passed through the Strait, carrying 2.2 million barrels of crude and 380,000 barrels of petrochemicals. This marks a significant decrease of approximately 84% and 94% respectively, compared to the first quarter of 2025, when 14.2 million barrels and 5.9 million barrels of petroleum products were shipped daily.
The Cape route is becoming the default option for vessels, forcing import businesses to reroute cargo, which is tying up inventory in African ports. To bolster inventories and increase liquidity buffers, industry insiders view the change as permanent. John Stevens, senior vice president of Kybira, explained that this shift has converted inventory into a liability on the CFO's balance sheet, as higher days inventory outstanding stretches the cash conversion cycle, requiring companies to either borrow or extend supplier terms.
According to Allianz Trade's report, the disruption is expected to add a global average of two days to the cash conversion cycle (CCC) in the second half of 2025, with the impact of the U.S.-Iran conflict further exacerbating the situation. Electronics, pharmaceuticals, textiles, automotive suppliers, metals, and paper are the most direct industries facing pressure, with construction and machinery & equipment carrying the largest absolute cycles.
These industries have limited room to absorb further inventory increases without facing distress in their financing needs.
Stevens emphasized that every day added to days inventory outstanding (DIO) means cash pulled out of circulation, which comes at a premium at current financing costs. CFOs should price these cash flow hits before any inventory build-up, counting days and dollars rather than units. Large, investment-grade buyers may be better positioned to fund inventory builds, while their mid-market suppliers may struggle. Supply-chain finance can help address the gap if structured transparently and appropriately.
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