The Economic Fallout of the 2026 Strait of Hormuz Closure

The Strait Reopens—But Traffic Remains Far Below Normal

On 18 June, 25 commercial vessels transited the strait, the highest daily count since April, but that represented only a fraction of pre-crisis traffic . Analysts at Kpler cautioned that "reopening does not equate to a recovery," noting that about 119 loaded tankers remained stranded inside the Gulf . The U.S. naval blockade on Iranian ports is required to be fully lifted by 19 July, and Iran has committed to using its "best efforts" to restore normal traffic within the same timeframe .

However, significant obstacles remain. Naval mines, elevated insurance costs (war-risk premiums rose from roughly 0.1% of vessel value to nearly 5%), and damaged infrastructure mean disruptions could persist for several more months . The U.S. has indicated that mine-clearance operations may take up to six months .

Manufacturing PMI: UK Feels the Pain, Canada Data Unavailable

United Kingdom: The S&P Global UK Manufacturing PMI fell to 52.5 in June 2026, down from May's four-year high of 53.9 . While still above the 50.0 expansion threshold, the decline reflected fading new work orders even as factory output hit a 21-month high driven by stockpiling ahead of anticipated price rises . In April and May, UK manufacturers reported the sharpest input cost increases since mid-2022 and the most severe delivery delays since 2022, directly attributed to the Hormuz closure . By June, the UK composite PMI output had fallen to a 14-month low of 49.4, slipping into contraction .

Canada: Specific Canada manufacturing PMI data for June 2026 was not captured in the available search results. A global PMI report from June 2025 included Canada in a chart alongside other nations, but no current June 2026 reading for Canada was found in the sourced material . This is a notable gap in the available evidence.

Eurozone Context: The Eurozone composite PMI for June was 49.5, still in contraction territory but up from 48.5 in May . Manufacturing was particularly weak due to energy costs and supply disruptions from the conflict. S&P Global noted that "the greatest overall impact on supply chains and input costs so far has clearly been in Europe" .

Metal Markets Under Pressure: Steel and Aluminium

Iranian Steel Exports: Iranian steel billet exporters continued offering cargoes despite the Hormuz closure, but transactions were unstable due to limited vessel availability, high insurance costs, and shipping disruptions . Alternative logistics channels and the port of Chabahar supported some export flows to China and India . Iran also suspended all steel slab and sheet exports until 30 May after conflict-related damage took approximately 10 million metric tonnes of annual capacity offline .

China's Steel Exports: The disruption hit China's steel exports to the Middle East—a region that accounted for roughly 14% of China's total finished steel export volume—by halting shipping through the strait . By 10 March, a "de facto" blockade had brought Chinese steel exports to the Persian Gulf to a grinding halt, with maritime insurers withdrawing coverage and freight rates spiking by more than 30% .

Aluminium Futures: The Gulf states produce approximately 9% of the world's aluminium supply, and the war directly drove up aluminium prices . Prices increased by 8% in March 2026 alone, and on 28 March, Iran struck Emirates Global Aluminium, causing massive production disruptions . Over 150,000 tonnes of metal registered on the London Metal Exchange were pulled from warehouses, reflecting the wider disruption to regional exports . The aluminium shortage has direct implications for automotive, aerospace, electronics, and construction industries .

How Long Will Prices Take to Normalize?

Analysts are unanimous that normalization will be gradual, not immediate:

• "Several weeks, if not months" for oil and resource availability to return, due to ship repositioning and infrastructure evaluation .
• A widely cited rule of thumb from Man Group portfolio manager Albert Chu states that "for every one day of Hormuz outage, the global energy supply chain needs three days to normalize" . A separate estimate from Bloomberg-affiliated analysis suggests seven days of recovery per day of disruption, which would imply roughly 28+ weeks (about 7 months) from the ~120-day closure .
• DW reports that naval mines, elevated insurance costs, and geopolitical uncertainty mean disruptions could persist for several more months .
• The UN Conference on Trade and Development warned on 30 June that while reopening brings immediate relief to energy markets, food and transport systems will take longer to recover, and vulnerable economies face prolonged higher costs .
• The UAE's state-owned oil company has said that full shipping flows may not normalize until 2027 .

Overall, full price normalization is not expected before late 2026 or early 2027, requiring months of demining, infrastructure repair, and supply chain rebalancing .

The Broader Economic Picture

The OECD revised its global growth forecast downwards in June 2026, cautioning that the economic fallout could significantly escalate unless a lasting peace agreement is achieved . Oxford Economics estimated that the combined shock of reduced oil supply, higher shipping costs, and the geopolitical risk premium would lift U.S. inflation to 5.5% and Eurozone inflation to 3.5%, with Eurozone and Japanese GDP contracting in the second half of 2026 . The IMF's managing director warned of "secondary and tertiary impacts" that could trigger "downward adjustments in global growth forecasts" .

Beyond oil and metals, the closure disrupted flows of sulfur (Gulf countries account for roughly 45% of global supply), methanol, and high-grade iron ore pellets—commodities essential for fertilizer production, green energy technology, and industrial manufacturing . The crisis made clear that the Strait of Hormuz is not just an oil chokepoint; it is a linchpin of the entire global commodity trade.

Key Takeaways

• The strait reopened on 18 June 2026 after a ~120-day closure, but traffic remains well below pre-crisis levels.
• UK manufacturing PMI fell to 52.5 in June as stockpiling faded; Canada PMI data for June 2026 is not available in sourced reports.
• Aluminium prices rose 8% in March; Iranian steel exports continued but with unstable transactions.
• Full price normalization is expected to take until late 2026 or early 2027, with mine-clearance, ship repositioning, and supply chain rebalancing all contributing to the delay.