More Than Oil! The US-Iran conflict is disrupting three critical supply chains

How does the helium shortage caused by AI impact the production process of AI chips?

Cailian Press, March 23 (Editor: Bian Chun) As one of the most severely affected supply chains by the US-Iran conflict, oil has recently dominated headlines, but the impact of this conflict extends far beyond the energy market.

In addition to oil, the conflict has disrupted the flow of other key raw materials and commodities, including helium, pharmaceuticals, and fertilizers.

“The Strait of Hormuz is not only a critical chokepoint for global energy but also vital for the transportation of other bulk commodities,” a UBS analyst warned clients recently, explaining that “any long-term disruption could not only affect energy prices but also impact food prices and industrial production.”

Below are some major commodities affected by the war that are crucial to the global economy:

Helium

The conflict has dealt a heavy blow to global helium supplies, which are widely used in high-end AI hardware and healthcare.

After Israel attacked Iran’s natural gas fields, Iran retaliated by attacking a liquefied natural gas (LNG) plant in Qatar. This plant accounts for nearly one-fifth of global LNG trade and is an important source of helium— a byproduct of LNG processing.

According to the U.S. Geological Survey, Qatar is one of the world’s largest helium producers, second only to the U.S., with its helium output expected to account for over one-third of global production by 2025.

UBS notes that helium is “a critical raw material for semiconductors, industrial manufacturing, and medical imaging equipment.”

The timing of this helium supply disruption is particularly unfortunate, as major tech companies are heavily investing in AI infrastructure.

Independent research firm The Kobeissi Letter found that “the market is currently losing about 5.2 million cubic meters of helium per month, and there is almost no backup capacity globally because helium evaporates during storage and must be delivered to end-users within about 45 days.”

The report also states that, due to supply shocks, helium prices have doubled, and if the disruption continues, prices could surge another 25% to 50%.

Pharmaceuticals

Disruptions in commercial transportation caused by the Iran conflict have damaged global pharmaceutical trade. The most affected are drugs with short shelf lives, as delays in transportation can compromise their quality.

The conflict has led to the shutdown of key Middle Eastern air freight hubs (Dubai, Doha), blocking about 20% of global air transport for pharmaceuticals and further cutting off rapid supply routes for critical medicines. Industry executives have warned that the war is disrupting key channels for delivering medicines to the Gulf region, threatening the supply routes for refrigerated cancer drugs and other treatments.

According to Think Global Health, an online platform under the Council on Foreign Relations focused on global health issues, affected medicines include vaccines, insulin, biologics, and cancer treatments.

The think tank states that, thanks to inventory buffers, most countries face a low short-term risk of drug shortages, but pharmaceutical companies may pass related costs onto consumers.

The severity of the impact on the pharmaceutical industry will depend on the duration of the conflict.

Fertilizers

The blockade of shipping through the Strait of Hormuz has also affected the flow of fertilizers, which are vital to agriculture.

The United Nations estimates that about one-third of the world’s shipped fertilizers pass through the Strait of Hormuz.

As the conflict persists, fertilizer prices are soaring, increasing the production costs for farmers during the spring planting season, and consumers may face higher food prices.

An industry advocacy group warned that fertilizer supply shocks come alongside rising energy costs and record-high input costs for farmers.

With purchasing power already a major concern, consumers may feel the impact of this supply disruption through higher prices at grocery stores and restaurants.

(Cailian Press, Bian Chun)