Military escalation reignites risks in the Strait of Hormuz and impacts energy, insurance, and global supply chains.
The military offensive launched on February 28, featuring strikes by the United States and Israel against targets in Iran, culminated in the closure of the Strait of Hormuz by the Iranian government, thereby blocking the route through which approximately 20% of the world's oil passes and causing a tanker bottleneck in the region.
The market reaction was immediate: primarily driving up crude oil prices and increasing marine insurance premiums. For companies with international operations, the impact extends beyond energy and directly affects, for example, freight rates, logistics routes, and total import costs.
According to Mateus Botelhos, expert and managing partner at Level Trade, a Level Group company dedicated to Global Sourcing operations, this moment demands proactive action. "Conflicts like this disrupt routes, drive up insurance costs, and expose contractual vulnerabilities that go unnoticed during periods of stability," he states. "The greatest risk lies not only in the immediate disruption of supply chains, but in the lack of strategic preparation."
Impact hits freight, suppliers, and shipping vessels
In addition to crude oil price volatility, the conflict puts pressure on marine cargo insurance premiums; international freight costs; vessel availability on sensitive routes; and triggers currency fluctuations.
Therefore, companies with international operations need to quickly review their contracts and cost structures to avoid surprises in the so-called landed cost — the total cost of the operation including customs-cleared goods.
"Procurement leaders cannot solely monitor exchange rates. Sometimes, expediting a shipment by paying slightly higher freight today can be cheaper than absorbing an explosive spike in fuel prices next week," explains the expert, who points out three critical fronts for companies in wartime scenarios:
Supplier management in risk zones:
Therefore, the first step is to carry out detailed logistics mapping. It is not enough to know where the supplier is located; one must understand where the cargo moves. Botelhos recommends:
- Immediately mapping critical routes;
- Understanding the full supply chain logistics, at least for critical items;
- Evaluating alternatives outside the conflict's zone of influence;
- Structuring dual-sourcing strategies outside the zone of influence;
- Reviewing "force majeure" clauses in international supply contracts.
"Many companies discover too late that their cargo passes through a vulnerable route. Mapping must be proactive, not reactive," he warns.
Internationalization and negotiations in a crisis environment:
During times of instability, pay close attention to costs related to marine insurance—in Middle East conflicts, these usually face immediate surcharges. According to the expert, it is crucial to:
- Monitor risk surcharges applied by insurance providers
- Reevaluate Incoterms used in operations. Under these conditions, the closer the transfer of title of goods occurs to the supplier, the better;
- Prioritize terms where the importer maintains control over freight and insurance
"In times of instability, retaining control over freight and insurance—purchasing under terms where the importer controls the logistics—can be safer than leaving it in the hands of the foreign supplier," he states.
Currencies, crude oil, and the ripple effect on freight:
Since the conflict in Iran began pushing up oil prices, shipping companies have already been seeking alternatives to the Strait of Hormuz due to attacks, which directly impacts global transportation costs. Thus, to mitigate financial risks, Botelhos recommends:
- Structured use of foreign exchange hedging
- Crude oil price monitoring
- Freight rate increase scenario simulations
- Real-time landed cost review
"Supply chain management must work in an integrated manner with the finance department. War is a geopolitical risk, but the ultimate impact is economic and operational," emphasizes Botelhos.
Preparedness is a competitive advantage
For the managing partner at Level Trade, companies that treat procurement and supply chain as strategic functions are able to react with greater speed and less disruption.
"Geopolitical crises are inevitable. What sets resilient companies apart is their ability to anticipate scenarios, renegotiate contracts, and adjust routes before the entire market enters panic mode," concludes Botelhos.
About Mateus Botelhos
Mateus Botelhos is a managing partner at Level Trade, a Level Group company dedicated to Global Sourcing operations. With over 20 years of experience leading multinational and domestic companies, he has a strong track record in new business development across Brazil and other Latin American countries. He has extensive international experience and holds a degree in mechanical engineering from IMT-Mauá and an MBA from IAE.
For more information: LinkedIn
About Level Group
Level Group is a global company with over 18 years of experience, specialized in transforming procurement and supply chain into high-performance functions through the integration of strategic consulting, BPO, and advanced technology. With a presence in Brazil, the United States, Latin America, China, and India, it supports mid-market and large enterprises in efficiency, governance, and operational transformation initiatives. The company has already generated R$ 10 billion in savings, executed more than 2,000 projects, and manages 200,000 contracts, 50,000 suppliers, and 90,000 third-party professionals. Its portfolio includes solutions in strategic sourcing, supplier management, contracts, compliance, automation, analytics, and artificial intelligence.
Recognized as a benchmark in the Brazilian market, Level Group stands out for combining measurable financial results, operational control, and proprietary technology, supporting strategic procurement and supply chain decision-making with a long-term vision and a focus on sustainable performance.
For more information, visit the official website
