Hormuz Blockade Hits German Factories

For three months now, commercial shipping has been unable to move through the Strait of Hormuz. The crisis began in the language of geopolitics, but it is now being felt on factory floors. In Germany’s chemical sector, the share of firms reporting material shortages rose from 7% in April to 31.1% in May (Wiwo/ifo, 28 May). ifo economist Anna Wolf described the rise in orders as "temporary". Companies are preparing for a longer interruption, and even a diplomatic deal this week would not quickly repair the damage already done.

Insurance is what keeps the strait closed

The key mechanism is not only military risk. It is insurance. On 5 March, the major P&I clubs, the mutual insurers that cover crew, cargo and environmental liability for almost every commercial vessel, cancelled war-risk cover for Hormuz (Property Casualty 360, March 2026). Without that cover, a ship cannot dock at any port. For vessels still trying the crossing, hull war-risk premiums are now 5.5% of vessel value. A single voyage on a large tanker costs more than $6 million in insurance alone (The Flow Weekly, 26 May).

Tankers and LNG carriers have therefore been pushed around the Cape of Good Hope, adding weeks to each journey. LNG transits through the Suez Canal have fallen by roughly 90%, according to shipping tracking data (Schiffsradar24.de). That ties up vessels across the world and raises freight costs even for cargoes that were never meant to pass near the Gulf.

The politics has not caught up with the shipping reality. Trump’s Situation Room meeting on 29 May ended without a deal, while Tehran disputes his account of the terms (PBS News, Al Jazeera). Even if something is signed, that would only begin the process. Mine-clearance takes four to six months. Lloyd’s would then have to reclassify the zone before insurers restore normal cover. Full throughput before January 2027 is unlikely (LMA Lloyd's).

The €15 billion storage gap

Europe normally spends the summer filling gas reserves for winter. This year, that work is badly behind. Germany’s reserves are at 30.6%, about half the 67% level that would be normal for late May (BDEW). ACER, the EU’s energy regulator, estimates that closing the gap across Europe will cost an extra €10–15 billion (EMA Energiewelt). That money will move through utilities and land with households and industry as higher bills.

German factories are already cutting hours to get through the supply shock. The ECB, the European Central Bank that sets interest rates for the 20 eurozone countries, is expected to raise rates by 0.25 percentage points on 11 June. Markets put the probability of a hike at 91% (ECB Watch, Euronews). That matters beyond Germany. Irish mortgage holders and firms are exposed to the same eurozone rate cycle, just as energy costs start to eat further into household and business cashflow.

The global cushion is also wearing thin. The IEA’s 400-million-barrel strategic release is roughly 55% used, and the cumulative supply deficit could reach 900 million barrels by September (Brookings), just as summer driving and cooling demand peaks. Bypass pipelines through Saudi Arabia and the UAE can carry only a fraction of the volumes Hormuz handled before the crisis.

Rainer Seele, chairman of ADNOC XRG and a veteran of Gulf and European energy markets, put the problem plainly: "The recovery of supply chains will not come overnight. It will take months" (Tagesspiegel, 27 May). By autumn, each week lost in the Gulf will be visible in Europe’s gas reserves.