Four Potential Iran War Supply Chain Scenarios – and What to Do Now
After a discussion with supply chain and ops leaders last week, we share a view on how the Middle East conflict could play out and resilience strategies moving forward.
Last week, Zero100 gathered a group of supply chain leaders from the consumer goods, food & beverage, quick-service restaurants (QSR), packaging, and logistics sectors to gauge the impact of the Iran War on their operations in the short term, as well as on their longer-term thinking.
While maritime chokepoints have been the source of multiple supply chain disruptions during the past five years, major waterways like the Suez Canal/Red Sea and Panama Canal can be navigated around – albeit at significant time and expense. But the conflict in the Middle East has highlighted the Straitof Hormuz as a single point of failure when it comes to getting oil, gas, and critical raw materials out of the Gulf region.
Live polling of leaders during the virtual roundtable revealed that:
- Moderate disruption requiring partial re-routing has been experienced by more than three-quarters of the participating companies, with the rest seeing minor delays and/or cost increases.
- Rising commodity and freight costs are the main concern right now, followed by material and product supply availability, and rising energy costs.
- Moving orders to suppliers in different regions (as opposed to just second sources) has been the main response, taken by 90%, with 60% increasing inventories of critical materials and 40% raising prices for finished goods.
Uncertainty and volatility were called out as major challenges. Managing stakeholder expectations about “what’s coming next” was arguably more difficult than dealing with physical disruption on the ground, noted one QSR participant.
Four Scenarios to Consider
To provide some guidance in this area, Zero100 put forward four potential scenarios for how the conflict could play out during the remainder of 2026:
- Diplomatic Resolution (Best-Case Scenario): A lasting ceasefire brokered by Pakistan or other major powers, with Iran agreeing to open the Strait of Hormuz in exchange for sanctions relief, and Gulf security stabilizing.
- Low-Intensity Conflict: Intermittent strikes and proxy actions (eg, by Hezbollah, the Houthis) continue without decisive advantage for either side. Exports of oil, LNG, and key commodities, including fertilizers, polyethylene, and helium, flow but with elevated risk and volatility.
- Sustained Gulf Crisis: Chronic Iran conflict normalizes Gulf and Red Sea disruptions, with higher costs and longer routes becoming permanent baselines.
- Global Escalation (Worst-Case Scenario): China moves against Taiwan amid Middle East escalation, triggering global semiconductor, raw material, and other supply chain shocks.
Analyzing these four scenarios against activity on Polymarket, a prediction platform where people bet on the outcome of future events, showed that, as of mid-April, Low-Intensity Conflict was the most likely, with a 40-50% probability. Sustained Gulf Crisis was second at 25-30%.
(While not a substitute for expert analysis, these crowd-sourced predictions do offer alternative benchmarks – such as a 37% chance of the Strait of Hormuz fully opening by the end of May.)
Our roundtable participants agreed that the Low-Intensity Conflict and Sustained Gulf crisis are the most probable scenarios but leaned more heavily towards the latter. Diplomatic Resolution ranked third and no one saw Global Escalation as likely (vs a 10-15% chance on Polymarket).
Disruption Will Persist Beyond Any Ceasefire
However, several also expressed concern that even if negotiations between the US/Israel and Iran prove fruitful in the coming days, disruption to supply chains would continue.
The CPO of one consumer goods company suggested that petrochemicals supply would be disrupted “for at least nine months.” The CEO of a logistics service provider to the food industry said ocean freight operations would continue to be hampered by mines in the Strait of Hormuz – even once it is finally declared open.
The Iran war experience, she said, had prompted leaders in her sector to ask, “what are the other global chokepoints that we need to be aware of?”
Some shipping routes at risk – and which require contingency plans – include the Strait of Malacca, through which 80% of China’s oil imports flow, and the Taiwan Strait, which facilitates around one-fifth of global maritime trade.
Lessons for Resilience Strategies
Reducing dependence on higher-risk geographic chokepoints like these and qualifying suppliers in different regions are among the main ways the Iran war will influence supply chain resilience strategies, our live poll showed.
But the main effect, according to 88% of the roundtable group, will be to accelerate moves to regionalized or localized supply chains – much as with tariffs and global trade disruption.
Leaders need to continue investing in network design, AI capabilities, and operating models to ensure that supply chains can respond to geopolitical events and other shocks in a fast and agile way.
Ultimately, it’s about turning risk into opportunity and competitive advantage – the military equivalent of going on offense rather than just playing defense.