The Hormuz Strait is most often discussed in the context of oil, but this is a simplification that, as economist Vedrana Pribičević warns in a LinkedIn post, hides a more important dimension. It is one of the key logistical hubs of the global chemical and industrial economy.
In her post, she highlights flows that are less visible but economically extremely sensitive. She states that about 36 to 39 percent of global helium production passes through this route, as well as about 34 percent of global urea trade and around 50 percent of maritime transport of sulfur. Additionally, approximately 34 percent of European imports of ethylene glycol and between 8 and 10 percent of global polymer production also go through Hormuz.
These are, she emphasizes, input materials for industrial systems from which complex high-value-added products are produced.
She explains that this is an example of a multivector shock that is not limited to energy alone. Helium, she notes, is irreplaceable in MRI devices and the semiconductor industry. Urea and sulfur are the foundation of global food production, while ethylene glycol and polymers are the infrastructure of industries ranging from textiles to automobiles and electronics.
When such flows concentrate in a narrow passage, it creates, as she notes, a classic example of structural risk. Not because there are no alternatives in an absolute sense, but because they are slow, expensive, or temporarily nonexistent. In conditions of low substitution possibilities, prices react sharply, and limited supplies quickly transmit shocks through value chains. If the same input is embedded in multiple industries, the effect becomes multiplicative.
In such circumstances, she adds, the system at one point stops reacting proportionally to the size of the disturbance and enters a nonlinear regime, in which a small additional shock can produce disproportionate consequences. At the same time, uncertainty increases as the behavior of the system is no longer predictable through standard economic relationships but depends on the interaction of stocks, expectations, and interrelated markets.
Citing the works of Dirk Helbing, Pribičević concludes that in globally interconnected systems, small disturbances can escalate through interconnections and feedback loops into cascading effects that transcend local shocks and become difficult to predict at the system level, where standard economic models begin to break down under the complexity of interrelated markets.
