Business / Logistics And Shipping
Impact of Middle East Conflict on Container Shipping
The ongoing conflict in the Middle East is significantly affecting the container shipping market, leading to increased costs and operational challenges for carriers. The volatility in oil prices and geopolitical tensions are creating an unpredictable environment for shipping operations. Despite some resilience in container shipping equities, the risk of decreased demand poses a threat to future profitability.
Source material: Drewry Webinar Container Market Outlook April 2026
Summary
The ongoing conflict in the Middle East is significantly affecting the container shipping market, leading to increased costs and operational challenges for carriers. The volatility in oil prices and geopolitical tensions are creating an unpredictable environment for shipping operations. Despite some resilience in container shipping equities, the risk of decreased demand poses a threat to future profitability.
Drewry has outlined two potential scenarios for the disruption in the Strait, predicting either a short-term impact or a prolonged disruption lasting up to 12 months. A short disruption may result in temporary spikes in freight rates, while a prolonged disruption could trigger severe economic shocks, including energy and food shortages, and a potential recession in import-dependent economies.
Container shipping to the Middle East is facing ongoing disruptions, necessitating contingency plans for fuel costs and availability. Bunker fuel prices have surged significantly, leading to emergency fuel surcharges from major carriers. The reliance on alternative routes is increasing, but this shift is accompanied by higher costs and operational complexities.
The conflict is prompting significant changes in container shipping networks, with shippers opting for shorter, more secure routes. This shift is leading to a notable decrease in Gulf mainline capacity and increased transit times. The adaptation to new routes may not be straightforward, as it raises questions about the sustainability of these strategies in the long term.
Perspectives
Analysis of the impact of the Middle East conflict on container shipping.
Drewry Shipping Consultants
- Highlights the significant impact of the Middle East conflict on container shipping costs and operations
- Proposes two scenarios for disruption, emphasizing the potential for severe economic consequences
- Warns of the ongoing volatility in bunker fuel prices and its implications for shipping
- Argues for the necessity of contingency planning in response to geopolitical tensions
- Claims that the reliance on shorter, more secure routes is increasing operational complexities
Neutral / Shared
- Notes the adaptability of container lines in response to successive global disruptions
- Mentions the potential for increased competition among carriers to drive down costs in the Gulf region
Metrics
oil_price
140 or 150 dollars per barrel USD
potential oil price increase due to prolonged disruption
A significant rise in oil prices could trigger severe economic repercussions.
if we were to see a one year disruption that drives oil prices up to say 140 or 150 dollars per barrel
freight_rate_spike
temporary spike in freight rates
impact of short disruption on freight rates
Increased freight rates can affect shipping costs and consumer prices.
a short disruption is going to result in little more than a temporary spike in freight rates
global_trade_growth
global trade growth would contract
impact of prolonged disruption on global trade
A contraction in trade growth can lead to economic recession.
under that scenario global trade growth would the growth would contract
bunker fuel price increase
60 to 80%
increase in bunker fuel prices
Higher fuel costs directly impact shipping expenses and operational strategies.
global bunker prices have risen by 60 to 80%
potential GDP growth reduction
up to 1.6 percentage points %
potential downgrade in global GDP growth due to oil prices
This reduction could tip economies into recession, affecting trade volumes.
that would imply a potential downgrade of up to 1.6 percentage points
capacity
over 48%
decrease in Gulf mainline capacity
This significant reduction impacts shipping costs and availability in the region.
more than 48% of Gulf mainline capacity was cut between the end of February meaning pre-conflict and the end of March.
time_charter_rates
elevated relative to freight rates
current market conditions
Indicates potential profitability for shippers despite market volatility.
the pressure is probably suggest that it will stay elevated relative to freight rates.
operational_capacity
fully operational
current operational status of shipping routes
Understanding operational capacity is crucial for predicting shipping reliability.
by this time next year we would be close to being back to fully operational
Key entities
Timeline highlights
00:00–05:00
The conflict in the Middle East is causing significant volatility in the container shipping market, leading to increased costs and operational challenges for carriers. Despite outperforming the broader market, the risk of decreased demand poses a threat to future profitability.
- The conflict in the Middle East is creating volatility in the container shipping market, prompting carriers and shippers to adapt their strategies
- Geopolitical tensions are causing unpredictable oil price fluctuations, which are directly impacting shipping costs and operations, leading to increased uncertainty in the industry
- Critical shipping routes in the Middle East have become high-risk areas, particularly affecting oil trade and resulting in higher costs for shipping companies
- Container shipping equities are outperforming the broader market despite the conflict, but the risk of decreased demand threatens future profitability
- Although the Middle East contributes a small portion of global container throughput, ongoing disruptions are raising costs and volatility, with risks escalating as the conflict continues
- Carriers are taking a cautious approach, operating in a fragmented manner while monitoring developments in the conflict to balance continuity and risk management
05:00–10:00
Drewry has outlined two scenarios for the disruption in the Strait, predicting either a short-term impact or a prolonged disruption lasting up to 12 months. The Gulf region, while not a major container market, is critical for economies reliant on imported essential goods, necessitating the development of multimodal feeder services.
- Drewry has outlined two scenarios for the disruption in the Strait, with the first predicting a short-term impact until June, resulting in a temporary spike in freight rates and a slight decline in global volumes
- The second scenario anticipates a prolonged disruption lasting up to 12 months, which could lead to significant oil price increases and severe economic repercussions, including energy shortages and inflation
- Container lines have become more adaptable due to previous global disruptions, enabling them to respond cautiously to the current crisis as trade dynamics evolve
- Drewrys phased response to the crisis began with a complete withdrawal from the Gulf region, followed by efforts to reestablish connections through alternative networks amid potential conflict escalations
- Although the Gulf region is not a major container market, it is crucial for economies reliant on imported essential goods, necessitating the development of multimodal feeder services to sustain supply chains despite rising costs
- Shipping services to the Gulf are currently more costly and slower due to the conflict, with war risk surcharges compounding the financial strain on carriers, who must prepare for further disruptions
10:00–15:00
Container shipping to the Middle East is facing ongoing disruptions due to conflicts, necessitating contingency plans for fuel costs and availability. Bunker fuel prices have surged by 60 to 80%, leading to significant regional disparities and prompting emergency fuel surcharges from major carriers.
- Container shipping to the Middle East will continue to face disruptions due to ongoing conflicts, requiring shipping lines to develop detailed contingency plans for fuel costs and availability
- Bunker fuel prices have increased by 60 to 80%, creating significant regional fuel supply disparities and prompting major carriers to introduce emergency fuel surcharges as demand shifts to safer locations
- Market adjustments in response to the conflict include reduced supply from the Middle East and inventory drawdowns, which may lead to product shortages and decreased demand if the situation worsens
- Some economies are already experiencing severe challenges, prompting emergency measures to conserve fuel, indicating that the conflict is impacting energy supply and economic stability
- Carriers are adopting operational strategies like slow steaming to manage fuel consumption, which will decrease effective shipping capacity across all trades and affect global trade dynamics
- Forecasts for container port growth have been revised downward due to the negative impact of rising oil prices on global GDP, with potential oil prices reaching $150 per barrel possibly triggering economic recessions
15:00–20:00
The ongoing conflict in the Middle East is prompting significant changes in container shipping networks, with shippers opting for shorter, more secure routes. This shift is leading to increased costs and operational challenges, including a notable decrease in Gulf mainline capacity by over 48%.
- The Middle East conflict is leading to a redesign of shipping networks to avoid critical choke points, potentially making risk management a permanent feature of container shipping
- Shippers are opting for shorter routes for enhanced security, which may result in longer transit times and affect vessel demand
- Gulf mainline capacity has decreased by over 48% since the conflict began, causing delays and increased shipping costs to the region
- Bunker surcharges for Gulf shipping routes have risen sharply, although competition among carriers may eventually lower these prices
- Safety concerns for cargo and vessels are heightened in the Gulf and Red Sea, with port congestion further extending transit times
- Rising costs and capacity challenges are prompting shippers to reconsider future market overcapacity, emphasizing the need for strategic planning
20:00–25:00
Marine fuel prices are expected to remain elevated, prompting shippers to adopt standardized bunker policies to mitigate costs. Geopolitical uncertainties are influencing shippers to diversify routes and sourcing strategies to maintain supply chain resilience.
- Marine fuel prices are projected to stay high, prompting carriers to reduce ship speeds to save fuel. This change could disrupt shipping schedules and increase costs for shippers
- To counter rising fuel costs, shippers are implementing a standardized bunker policy based on an independent index. This approach aims to shield them from arbitrary price increases by carriers
- Geopolitical uncertainties are driving shippers to diversify their routes and sourcing strategies. Such adaptations are vital for maintaining supply chain resilience amid ongoing disruptions
- The current conflict is expected to have a milder impact on spot rates compared to the COVID-19 pandemic. This indicates that shippers might still secure favorable contract rates despite geopolitical tensions
- Concerns about potential overcapacity in the market are growing among shippers. Keeping an eye on supply and demand trends will be essential for informed decision-making in the near future
- Countries in Asia that depend heavily on Gulf oil imports are likely to encounter significant challenges due to supply disruptions. This situation highlights the importance of energy-saving measures and alternative sourcing strategies
25:00–30:00
The time charter market is currently experiencing a disconnect from freight rates due to a shortage of feeder ships, exacerbated by their repurposing for Russian trade. This situation may keep time charter rates elevated in the near term, despite potential corrections from overcapacity.
- The time charter market is experiencing a disconnect from freight rates due to a shortage of feeder ships, worsened by vessels being repurposed for Russian trade. This situation may keep time charter rates high in the near term despite potential corrections from overcapacity
- Ports in the Red Sea and Eastern Mediterranean, including Akaba and certain Turkish ports, are likely to benefit from the current geopolitical climate. This could improve logistics in the Gulf region, especially if the proposed East-West container corridor railway is realized
- Shippers are encouraged to explore routes outside the Middle East, such as Europe to the US, to secure better rates. This strategy may lead to favorable outcomes despite higher initial bunker costs
- The future of the Suez Canal is uncertain, with earlier predictions indicating it may take years to return to pre-disruption traffic levels. This uncertainty necessitates that shippers adjust their strategies to navigate ongoing geopolitical issues
- The ongoing crisis is expected to boost demand for feeder ships, potentially driving up time charter rates. This trend highlights the need for shippers to closely monitor market changes influenced by geopolitical factors
- Shippers should stay alert to rising costs and consider diversifying their supply chains to reduce risks from geopolitical disruptions. This proactive strategy is crucial for maintaining supply chain resilience amid uncertainties