Vessel traffic through the Strait of Hormuz fell by approximately 70% within hours of strikes on Iran on 28 February 2026, triggering disruptions to fuel supplies, shipping routes, and industrial gas availability that are now being felt across the global automotive industry.

The Strait of Hormuz, a narrow waterway between Iran and the Arabian Peninsula, carries roughly 20% of the world's oil supply. Its disruption has forced shipping operators onto alternative routes around the Cape of Good Hope, adding 10 to 14 days to voyages and creating congestion at ports as far as Singapore, Colombo, and Mundra in India.

Marco Forgione, Director General of the Chartered Institute of Export and International Trade, said after the strikes: "Nothing will be transiting the Strait of Hormuz — that's oil and liquefied natural gas."

Jebel Ali Port in Dubai, the world's largest man-made harbour, temporarily suspended operations following the outbreak of the conflict. Airspace closures across the Middle East reduced global air cargo capacity by 18%, with carriers suspending services to regional hubs. For automotive manufacturers operating on just-in-time inventory models — which minimise stock held at each stage of production — the closures left few options to keep assembly lines running.

The conflict also threatens 22% of global liquefied natural gas exports, which originate primarily in Qatar. Bahrain and the UAE together account for 9% of global aluminium smelting, and the Gulf holds significant oil refining capacity. Disruption to any of these inputs adds cost pressure to vehicle production, where steel, aluminium, and petrochemical derivatives are key materials.

Toyota has cut planned production for the Middle East market by nearly 40,000 vehicles, according to Reuters. Volkswagen Passenger Car Sales Chief Martin Sander, speaking in London on 12 March 2026, noted: "We see already in many markets customer sentiment going down. We've had a lot of uncertainty among consumers already and this is now, of course, adding another layer of anxiety."

The effects are concentrated in India, which imports approximately 90% of its crude oil and around 60% of its liquefied petroleum gas, with the majority of those imports passing through the Strait. LPG and piped natural gas are used directly in automotive manufacturing — in paint shops, forging operations, and furnaces — and shortages are prompting concerns about production cuts at both vehicle manufacturers and component suppliers. Steel and petrochemical production, both inputs to automotive manufacturing, face similar constraints.

The disruption carries a social dimension in India. LPG shortages have led migrant factory workers to return to their hometowns as cooking facilities at dormitories and canteens become unavailable, adding workforce attrition to the pressures already facing manufacturers. Vinnie Mehta, Director General of the Automotive Component Manufacturers Association of India, said: "Currently, the situation is not like the COVID pandemic, but the situation can escalate if not resolved."

India's government has formed a three-member committee following industry requests for the restoration of adequate LPG, propane, and piped natural gas supplies for industrial use. The Society of Indian Automobile Manufacturers has urged the government to restore industrial allocations and provide greater visibility on supply availability.

The industry is responding to the crisis from a position of strain. Automotive manufacturers are still absorbing costs from tariffs, the COVID-19 pandemic, and supply disruptions linked to the war in Ukraine, while simultaneously investing in electric vehicle development. An executive speaking to CNBC described the pattern: "It's not just perception. It's not just how it feels. These things are continually disruptive."

S&P Global Mobility has outlined two scenarios. A conflict lasting up to three months would cause limited economic disruption, with recovery possible within the year. A prolonged conflict would inflate production costs, likely leading manufacturers to prioritise higher-margin vehicles over entry-level models — a pattern seen during the pandemic — and could accelerate the shift to electric vehicles as sustained high oil prices alter the economics of combustion engine manufacturing.

Lisa Anderson, President of LMA Consulting Group, said: "Conflicts in strategic regions create ripple effects far beyond the immediate area. Energy flows, transportation routes, materials and communications networks are interconnected. When disruption occurs in one part of the system, supply chains around the world feel the impact."

Analysts and industry executives say the crisis is prompting a reassessment of supply chain strategy, including the regionalisation of supply networks, strategic stockpiling, and investment in domestic production capacity. In the short term, greater resilience is expected to reduce cost efficiency — raising the question of whether manufacturers will absorb those costs or pass them on to consumers.