Strait of Hormuz Reopening Could Trigger a Sharp Move Across Global Markets

Oil, gas and food prices could fall quickly if shipping returns, creating potential winners and losers across global shares

Reports that the Strait of Hormuz could reopen have major implications for global markets. The waterway normally carries around one-fifth of the world’s oil and liquefied natural gas, making it one of the most important shipping routes on earth.

Traffic through the Strait has fallen dramatically during the conflict. Middle Eastern oil exports were still around 9 million barrels per day below pre-war levels in July, although much of the region’s production could potentially return within several months.

A confirmed reopening could therefore cause an immediate fall in energy prices and potentially ease inflation across the global economy.

Five Essential Commodities That Could Be Affected

Oil would probably react first. Brent recently traded around $84 a barrel after already falling sharply on hopes of an agreement. Capital Economics expects Brent to finish the year near $75 if conditions improve.

Natural gas could also fall as more LNG becomes available. However, the impact may be smaller because 17% of Qatar’s LNG production capacity is expected to remain offline for two to three years, while European gas storage is unusually low.

Fertiliser prices could see significant relief. Roughly one-third of global fertiliser trade normally passes through Hormuz, while urea prices previously jumped around 30% to 40% following the disruption.

Wheat could benefit indirectly. Wheat itself is not heavily shipped through Hormuz, but farmers depend on fertiliser, fuel and transport. Lower fertiliser and energy costs could reduce production costs and eventually place downward pressure on global food prices.

Aluminium could also become cheaper. Gulf countries are important suppliers of aluminium, and the conflict has disrupted both production and shipping. Lower energy and freight costs could help restore supply to manufacturers.

In simple terms:

• Oil could fall as millions of barrels return to the market
• Natural gas could fall, although damaged LNG infrastructure limits the downside
• Fertiliser could fall as Gulf exports restart
• Wheat and other food prices could ease as farming costs decline
• Aluminium could fall as energy and shipping conditions improve

Which Stocks Could Benefit?

If the Strait genuinely reopens and oil prices fall sharply, three European shares stand out as possible beneficiaries.

International Airlines Group could be one of the most direct beneficiaries. The British Airways owner expects a 2026 fuel bill of roughly €8.3 billion to €8.6 billion after the Iran conflict pushed jet-fuel costs higher. Lower fuel prices could therefore improve margins and cash flow.

Ryanair could also benefit. Its latest quarterly profit fell by around a third as higher fuel costs combined with weaker fares. A reduction in oil prices and an improvement in consumer confidence could remove two major pressures at once.

BASF is a more indirect opportunity. The German chemicals group has faced sharply higher energy and raw-material costs during the conflict and even raised some product prices by as much as 30%. Cheaper gas, oil and feedstocks could help its European manufacturing operations.

What Investors Should Watch

A reopening could initially favour airlines, transport companies, chemical manufacturers and other businesses that consume large amounts of energy.

Oil producers could face the opposite effect as falling crude prices reduce expected profits.

However, investors should be careful about assuming prices will immediately return to pre-war levels. Global oil stocks remain depleted, emergency reserves are being used and some energy infrastructure has suffered lasting damage.

The biggest market-moving event would therefore not simply be an announcement. It would be evidence that tankers are actually moving through Hormuz again in large numbers and that the agreement between the US and Iran is holding.

Sources: (Reuters.com, Ultimamarkets.com, Morningstar.com)