Trade Tidbits – March 6, 2026

Iran Sitrep

Veteran subscribers will know that when there’s some sort of sudden and sustained supply chain shock (COVID, Ever Given, Key Bridge collapse, etc.), I tend to pop updates at the top for a bit. And, well, there’s a new one with the military engagement against Iran. I’ll just be focusing on the supply chain-related aspects and a general state of play, not necessarily the day to day. With that, let’s get into it.

Iran has now launched strikes on 12 countries in its neighborhood, though the quantity of strikes has fallen off. Still, Iran has targeted oil refineries, sea ports, and airports. It has also vowed to attack ships transiting the Strait of Hormuz, through which about 20% of daily oil consumption transits. All this has already had massive impacts on energy and shipping.

Starting with energy, crude oil is hockey sticking, with WTI jumping from down around $65/barrel on 2/26 to $89 and Brent from $70 to $91. That, in turn has sent gas prices spiking from a nationwide average of about $2.98/gallon to $3.30 for regular unleaded and from $3.75 to $4.12 for diesel.

The White House is watching gas prices closely and starting to make some moves to attempt to drive down prices. National Economic Council Director Kevin Hassett said they have “a whole flow chart of tools to use.” The U.S. announced a 30-day waiver for India to buy Russian oil. It’s also weighing some action on the shipping side to keep supplies moving, which I’ll get to in a second. Beyond the U.S., countries are starting to look at rationing, while China told its oil refiners not to export gasoline or diesel.

The conflict is impacting LNG as well, with Qatar, the second-largest exporter, halting production, which has sent prices soaring for Europe and others in Asia. Qatar’s Energy Minister told the Financial Times that even if the conflict were to end today, it’ll take “weeks to months” for things to level out. It does sound like the first LNG cargo has been loaded, so we’ll see what happens from here. We’re already seeing impacts of the LNG spike on fertilizer production.

On to shipping. Flexport CEO Ryan Peterson had a good X thread on the overall state of play if you want a quick and dirty, but I’ll go through things as well. Amid such a sudden turn of events, insurance has seized up, with costs rising as much as 12x and some policies being canceled. Major shippers stopped accepting Gulf bookings and air cargo rates have surged.

We have reports that one container ship was hit by an “unknown projectile,” forcing its crew to abandon ship, but I haven’t seen any confirmation on the origin of the projectile. The Financial Times reports that at least seven tankers have been hit since Sunday, while others have received threatening radio messages from Iran. Even still, a few ships have Leroy Jenkinsed it through the Strait, but those are exceptions not the rule.

With shippers facing both security and financial risks, President Donald Trump truthed measures on Tuesday to try to address both. On security, he said, “if necessary, the United States Navy will begin escorting tankers through the Strait of Hormuz, as soon as possible.” And though the Navy engaged with the Houthis in the Red Sea last year, guaranteeing security there was overall easier said than done. Could be a similar situation in the Strait.

On insurance, he ordered “the United States Development Finance Corporation (DFC) to provide, at a very reasonable price, political risk insurance and guarantees for the Financial Security of ALL Maritime Trade, especially Energy, traveling through the Gulf.” Like the military escorts, this too may be easier said than done. Per the Financial Times, a JPMorgan analysis found that $352 billion is needed to underwrite all oil tankers in the region. However, Congress capped the DFC’s maximum total liability at $205 billion through 2031, and it’s already used $51.5 billion as of the end of 2025. Thus, the DFC can only cover $154 billion of the $352 billion. Still, insurers like Marsh, Aon, and Lloyd’s of London seem open to it.

Saudia Arabia is going to try to shift some shipments to the Red Sea, but the Houthis reminded everyone “hey we’re still here too,” warning of attacks there. France, Italy, and Greece, among others, are considering joining forces to ensure shipping stays online there.

Ok. Energy impacts, check. Shipping impacts, check. That’s it, right? Right? No. Because we have to have a trade threat too. After Spain kicked out U.S. military aircraft, President Trump threatened to “cut off all trade with Spain.” There wasn’t much elaboration from there, but Teresa Ribera, Spain’s EU commissioner, told local media, “It is not possible to engage in [individual] commercial retaliation or business relationships.” On Wednesday, the White House said there was an agreement to cooperation, which Spain denied. And that’s kinda where that sits.