Securing energy and trade flows in geo-economic conflicts

Global trade has long been viewed as a neutral ground that bolstered energy markets and fostered integration. However, in recent conflicts, governments have increasingly used tariffs and export controls as tools of power. Europe experienced this firsthand in 2022 when Russian gas, once a reliable commodity, became a weapon of pressure.

The Strait of Hormuz, Suez Canal, and Bab el-Mandeb Strait are critical waterways where a partial closure could disrupt world trade. In 2023, attacks on merchant ships in the Red Sea forced ships to reroute around Africa, leading to higher insurance costs, increased fuel consumption, and longer delivery times. Additionally, extreme drought in Africa caused the Panama Canal to reduce daily transits.

The Hormuz crisis of 2026 highlighted the need for flexible systems to absorb shocks in global trade. Despite the shift towards digital economies, a significant portion of world trade still relies on narrow waterways. Two years later, in February 2026 during the US-Israel-Iran war, the Iran Revolutionary Guard closed the Strait of Hormuz, causing global oil exports to plummet to a tenth of normal levels.

Asian importers faced the most significant impact, as they heavily depend on Gulf crude. The disruption also affected urea fertilizers, causing higher food prices. Gulf countries responded by finding alternative routes to export their energy, such as the Habshan-Fujeirah line created by the UAE. Securing energy and trade flows is crucial and will be a topic discussed at the TRENDS Annual Forum on October 12, 2026.

The Middle East plays a vital role in the global economy, often facing exposure to regional conflict but also possessing several approaches to secure trade. These include spreading the risk through additional routes, "friend-shoring" sensitive supply chains to ally countries, and stockpiling emergency reserves. These strategies have global implications, affecting fuel, farming, and food supply costs worldwide.