Shell’s chief executive Wael Sawan has warned that a worsening of the conflict between Israel and Iran could deliver a major shock to the global economy, as geopolitical tensions threaten to choke off one of the world’s most important energy supply routes.
Speaking at an energy conference in Tokyo, Sawan said Shell had drawn up contingency plans should the conflict result in disruptions to oil and gas flows from the Middle East. He said a blockage of the Strait of Hormuz—the narrow waterway linking the Persian Gulf to the Indian Ocean, through which around 25% of the world’s oil passes—would have a “huge impact on global trade”.
“If that artery is blocked, for whatever reason, it has a huge impact on global trade… We have plans in the eventuality that things deteriorate,” Sawan said.
The warning comes amid rising tensions in the region and growing speculation that the United States could intervene militarily, following suggestions by Donald Trump that the US may enter the air war. “I may do it, I may not do it. I mean, nobody knows what I’m going to do,” the president said on Wednesday, further fuelling market uncertainty.
Oil markets have already responded to the volatility. Brent crude climbed nearly 1% to more than $77 a barrel on Thursday as investors priced in the risk of supply disruption. Tanker activity in the region has also become significantly more expensive. Data from Clarksons Research, reported by the Financial Times, showed that the daily charter rate for a very large crude carrier (VLCC) on the Gulf-to-China route surged from $19,998 before last week’s Israeli strikes to $47,609 by Wednesday.
The 138% spike in charter rates far outpaces the 12% increase in the Baltic Dirty Tanker Index, which tracks crude oil shipping costs globally. Analysts attribute the jump to escalating fears over the safety of navigating the Strait of Hormuz, with interference in navigation signals already being reported in the Persian Gulf.
“What is particularly challenging right now is some of the jamming that’s happening,” said Sawan, pointing to disruptions in maritime GPS and communications systems in the region.
Financial markets responded cautiously to the developments. On Thursday, global equities slipped slightly, while investors shifted money into traditionally safer assets such as gold and the US dollar. Gold rose 0.1% to $3,372.36 an ounce, while the dollar gained ground against the euro, Australian dollar, and New Zealand dollar.
Kyle Rodda, a senior analyst at Capital.com, said uncertainty over the US response is feeding investor anxiety.
“Market participants remain edgy and uncertain. Speculation remains rife—fed probably strategically by the Trump administration—that the US will intervene, something that would mark a material escalation and could invite direct retaliation against the US by Iran,” he said.
Rodda added that any US involvement would significantly raise the risk of a regional war, with consequences that could ripple far beyond the Middle East, hitting global energy supply and economic growth.
The Strait of Hormuz is often described as the world’s most important oil transit chokepoint. Around 21 million barrels of oil per day flow through the passage, which is only 21 miles wide at its narrowest point. A disruption—whether through military conflict, sabotage, or blockades—could send oil prices soaring and intensify inflationary pressures just as central banks begin to loosen monetary policy.
Energy executives and policymakers are watching developments closely, especially as shipping insurers and charterers begin adjusting risk premiums for vessels travelling through the Gulf.
Shell, one of the world’s largest traders of liquefied natural gas (LNG) and crude oil, has deep exposure to Middle Eastern energy markets. The company’s contingency planning comes amid broader efforts across the sector to ensure continuity of supply should conflict escalate.
With tensions high and the Strait of Hormuz under threat, the coming days could prove pivotal—not just for global energy security, but for the stability of the broader world economy.
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Shell boss warns of ‘huge impact on trade’ if Israel-Iran conflict escalates