‘It’s not just oil’: CEO warns Hormuz shutdown could choke sulfur, chip and fertilizer supply

A shutdown of the Strait of Hormuz is often framed as an oil shock. But according to Gaurab Chakrabarti, Co-Founder and CEO of US-based chemical manufacturing firm Solugen, the real danger may lie far beyond crude prices — in the complex industrial supply chains that depend on oil and gas derivatives.  

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In a post on X (formally twitter), Chakrabarti argued that the strait’s closure for more than a week threatens not just the roughly 20 million barrels of crude oil per day that normally pass through the narrow waterway linking the Persian Gulf to global markets. Instead, he warned, the disruption could ripple through chemicals, semiconductors and even global food production.  

“The Strait of Hormuz has been closed for eight days. Everyone thinks this is about oil. This is about what oil becomes,” Chakrabarti wrote.  

The sulfur bottleneck  

One of the most overlooked consequences of disrupted oil and gas flows, he said, is the impact on sulfur production. Around 92% of the world’s sulfur is generated as a byproduct of refining petroleum and processing natural gas.  

That sulfur is the primary feedstock for sulfuric acid, widely considered the most produced industrial chemical in the world. The compound plays a crucial role in extracting key metals used in modern infrastructure and technology.  

Without sufficient sulfuric acid, mining companies face major constraints in processing copper and cobalt ores, two materials essential for electric vehicle batteries, electrical grids, transformers and high-performance electronics.  

A prolonged disruption in refining activity linked to the strait’s closure could therefore choke off supplies of sulfuric acid, triggering cascading effects across industries tied to electrification and digital infrastructure.  

Semiconductors and energy risk  

The implications extend beyond mining and chemicals. Chakrabarti pointed to a potential energy vulnerability in East Asia’s semiconductor industry, particularly in Taiwan.  

Energy imports are critical to the island’s power system, and a large portion of its liquefied natural gas (LNG) supply comes from the Gulf. Qatar alone accounts for about 30% of Taiwan’s LNG shipments, much of which travels through the Strait of Hormuz.  

If LNG deliveries are disrupted, Taiwan’s limited gas reserves — estimated at roughly 10 to 11 days under normal consumption levels — could quickly come under strain. That raises the prospect of electricity shortages affecting the island’s technology sector.  

At the center of that ecosystem is TSMC, the world’s most advanced contract chipmaker. The company produces about 90% of the globe’s cutting-edge semiconductors, components used in everything from smartphones and artificial intelligence systems to military hardware.  

TSMC’s operations are also highly energy-intensive, consuming close to 9% of Taiwan’s total electricity supply, meaning disruptions in power generation could ripple across the global electronics industry.  

Fertilizers and food security  

The strait’s strategic importance also touches global agriculture. According to Chakrabarti, roughly one-third of the feedstock used to produce nitrogen fertilizers moves through the Gulf shipping corridor.  

Nitrogen fertilizers, produced using natural gas and other hydrocarbon feedstocks, are a cornerstone of modern agriculture. Analysts often note that synthetic nitrogen has helped sustain food production for billions of people worldwide, dramatically increasing crop yields since the mid-20th century.  

Any prolonged disruption in the supply chain could tighten fertilizer markets, potentially raising costs for farmers and putting additional pressure on global food prices.  

One chokepoint, many supply chains  

At just 21 nautical miles wide at its narrowest point, the Strait of Hormuz remains one of the most strategically important maritime chokepoints in the world. A significant share of global oil exports from Gulf producers — including Saudi Arabia, Iraq, Kuwait, the United Arab Emirates and Iran — must pass through it to reach international markets.  

But as Chakrabarti’s analysis highlights, the strait’s significance goes far beyond crude shipments.  

Sulfur production, semiconductor manufacturing and fertilizer feedstocks — three pillars of the modern industrial economy — are all tied, directly or indirectly, to energy flows through the same narrow corridor.  

“Sulfur, semiconductors, food,” Chakrabarti wrote, summarizing the interconnected risk. “Three supply chains, one 21-nautical-mile chokepoint, and zero domestic alternatives at scale.”