The Middle East, shipping & energy prices: The Companies & Markets Show
The Investors Chronicle podcast discusses the impact of a Middle East conflict (involving Iran and the Strait of Hormuz closure) on global shipping, energy prices, and financial markets. The panel covers Clarkson's 2025 results, maritime disruptions, surging gas and oil prices, and how various sectors are responding to the crisis. The conversation also touches on interest rate repricing, fertilizer shortages, and air freight disruptions.
Summary
The episode opens with host Mark Robinson setting the scene: a major Middle East conflict centred on Iran has disrupted global markets, drawing comparisons to Russia's invasion of Ukraine but potentially more severe. Key knock-on effects discussed include the closure of the Strait of Hormuz, rising energy prices, fertilizer supply disruptions, and a reversal in interest rate expectations — traders who had priced in rate cuts are now facing the prospect of cost-push inflation and rising gilt prices.
Valeria Martinez covers Clarkson's 2025 results, noting that profits fell 21% (broking division down 23%) after a record-breaking 2024. The decline was largely attributed to Trump-era trade tariffs unsettling global shipping markets in the first half of 2025, causing new build orders to slump 27% and charter rates to soften. However, the Iranian conflict has sharply changed the narrative: vessels are now being diverted around the Cape of Good Hope, adding weeks to voyages and pushing up 'tonne miles,' which drives charter rates. Valeria notes that if charter rates triple (as they have in some markets), Clarkson's percentage-based commissions grow exponentially. IC upgraded Clarkson from hold to buy, citing a forward order book that ended 2025 higher than it started and early 2026 container and tanker spot business already running ahead of the prior year.
Michael Fay details the maritime disruption more broadly: 20 reported incidents involving ships in the region, 16 of which were direct attacks, affecting oil tankers, bulk cargo vessels, container ships, and ports. Major shipping lines including Maersk, Hapag-Lloyd, and MSC have suspended services, declaring 'end of voyage' and leaving cargo short of its destination. Jebel Ali in Dubai, a top-10 global port, is severely affected. Air freight is also disrupted, with Emirates, Etihad, and Qatar Airways collectively operating about 13% of global air freight capacity — much of which routes through now-closed Middle Eastern airspace — causing rates on key routes like India-Europe and Southeast Asia-Europe to rise 50–100%. LNG exports from Qatar are severely impacted, with 80% of Qatari LNG normally destined for Asia. UK spot gas prices are up ~70% and European gas futures up ~60%, with oil touching $100/barrel, up ~40% since the outbreak began.
Julian Hoffman provides a veteran investor's perspective, noting that some sectors heavily exposed to energy costs, such as industrial chemicals, have counterintuitively held firm or risen. He argues this is because the current shock is not a full supply cut-off as in 2022 (when European gas prices rose sixfold), and because major players like BASF have spent the intervening years hedging energy contracts, diversifying suppliers, and shutting down the most energy-intensive European operations. He suggests that cyclical sectors tend to attract buyers in advance of an earnings upswing, and that freight costs, while rising, remain a relatively small percentage of total costs for large industrials. The overall message is that momentum may favour buyers in those sectors despite short-term volatility.
Other news items briefly mentioned include: Revolut receiving a full banking licence from the PRA, Volkswagen cutting a further 15,000 jobs (total 50,000) to save ~€16bn in operating costs, and HMRC considering tax exemptions for expats fleeing the Middle East.
Key Insights
- Valeria Martinez argues that the Iranian conflict has 'completely switched overnight' the narrative from Suez Canal reopening pressures on charter rates to a scarcity-driven surge, with some charter rates tripling and Clarkson's percentage-based commission model meaning profits could grow exponentially if elevated rates persist.
- Michael Fay claims that three Gulf airlines — Emirates, Etihad, and Qatar Airways — together operate approximately 13% of global air freight capacity, and their airspace being largely closed is already driving 50–100% rate increases on routes such as India-Europe and Southeast Asia-Europe.
- Michael Fay notes that approximately 80% of Qatar's LNG production (from the world's largest refinery, which has stopped producing because it cannot ship out) is normally destined for Asian markets, meaning Asia faces the most direct LNG supply hit, though diversion of other global LNG shipments will affect European and global prices too.
- Julian Hoffman argues that large industrial chemicals companies like BASF have spent the years since the 2022 energy crisis hedging energy contracts, diversifying suppliers, and shuttering the most energy-intensive European plants, which is why their shares have held firm despite rising energy prices — investors are applying the logic that the impact will not be as catastrophic as in 2022.
- The podcast panel observes that the prospect of sustained cost-push inflation from the energy shock has all but reversed earlier market expectations of two quarter-point interest rate cuts in 2026, with rising gilt prices already prompting some mortgage lenders to reprice fixed-rate products.
Topics
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