Middle East Crisis Update: Impact on the Supply Chain

Dear Customers,

The continued escalation of the Middle East conflict and the prolonged closure of the Strait of Hormuz are reshaping global energy and transport markets in ways that have no recent historical parallel. With over than 39 days of the Hormuz disruption now behind us, we want to provide you with a clear, fact-based overview of what is happening, and how it affects transport costs across Ocean, Air, and Road.

Crude oil prices alone no longer explain what is happening in fuel markets.

Marine bunker, jet fuel, and road diesel are no longer moving in sync with crude, because each of these refined products depends on different regional supply chains, refinery configurations, and now heavily disrupted shipping corridors.

Why have transport fuels decoupled from crude?

• Marine bunker fuel (VLSFO): Prices in Asia have increased far more than crude due to reduced refinery output in key producing countries, and limited regional availability.
• Air Jet fuel: The largest shock across all transport fuels. Jet fuel does not just follow crude; it follows refinery output. With Gulf refineries unable to export through Hormuz, global jet fuel crack spreads have surged to record levels, pushing airline operating costs sharply upward.
• Road diesel: Diesel markets have diverged by region. Government caps in parts of Europe temporarily mask the true increase, whereas the US and parts of Asia are seeing rapid price jumps driven by refining bottlenecks.

What this means for freight costs?
The current increases in transport costs are not driven by traditional supply-and-demand dynamics, but by fuel-specific disruptions across three major corridors: Hormuz, the Red Sea, and now emerging constraints around Panama. This means that even if freight demand softens, rates can continue rising because the primary cost driver is fuel, not volume.
 
Why this report matters?

• Understand the structural changes underway in global fuel markets.
• Recognize why BAF, FSC, and road fuel surcharges are rising at different speeds.
• Anticipate how prolonged disruption in the Strait of Hormuz may prevent prices from returning to pre‑February levels for some time.
• Position your supply chain strategies, accordingly, including budget planning, routing choices, and contract considerations.

The goal is to offer transparency, clarity, and timely insights so you can make informed decisions in an environment that continues.

Our teams at DSV remain at your service for any inquiry or request.
For additional information, please contact us at: info@il.dsv.com

DSV ISRAEL