The dire straits of Hormuz ⛴️

The Strait of Hormuz… the second most mentioned name on the internet these days (the first one is, of course, President Trump).

Since Iran blocked the shipping channel, oil prices have surged to around $120 a barrel, their highest level since 2022. Petrol and diesel prices followed almost immediately, reminding markets just how sensitive the global economy still is to energy shocks.

But nine weeks into the conflict, it’s becoming clear this isn’t just about oil.

We’re starting to see the actual financial impact of the strait’s closure. Today, we’ll look into these numbers plus look at other trade routes that you need to keep an eye on.

What happened in the markets this week?

☁️ Google Cloud growth reshapes AI race as Big Tech spending tops $700 billion ( Reuters )

• What happened: Google Cloud reported a 63% revenue surge, outperforming rivals Amazon and Microsoft in cloud growth. At the same time, major tech companies signaled that combined AI spending will exceed $700 billion in 2026, up from earlier estimates of $600 billion.
• How it impacts investors: The scale of AI investment is accelerating, but markets are rewarding companies that can convert that spending into real revenue growth. This is creating a clearer divide between winners and laggards within big tech and cloud computing.
• Next steps: Dive into our high growth tech and AI stocks to track companies best positioned to benefit from this trend. 

🧠 Atlassian jumps 25% after-hours after earnings beats expectations ( Investing.com )

• What happened: Atlassian reported third quarter EPS of $1.75 and revenue of $1.79 billion, both well above analyst expectations, with revenue rising 32% YoY. The company’s cloud business drove much of the growth.
• How it impacts investors: Atlassian shares have been battered amidst concerns of AI impacting its business and its recent layoffs. These results prove the opposite of what the market’s feared.
• • Next steps: Atlassian is down 70% over the past 12 months. Check out its company report to determine whether this is a market signal or an entry opportunity.

🌮 Yum Brands beats estimates as value deals drive fast-food growth ( Reuters )

• What happened: Yum Brands reported Q1 results that beat Wall Street estimates for both same-store sales growth and profit, driven by strong demand at Taco Bell and KFC. The company posted 3% global same-store sales growth and adjusted earnings of $1.50 per share while Pizza Hut continued to see declining sales.
• How it impacts investors: This highlights how value-focused strategies are helping fast-food chains maintain demand in a weaker consumer environment. It also signals uneven performance across brands, which could shape how investors assess resilience within the sector.
• Next steps: Review Yum Brands’ company report to see peer comparisons and revenue stream.

🎬 Paramount is closer to acquiring Warner Bros. Discovery after shareholder approval ( CNBC )

• What happened : Warner Bros’ shareholders approved Paramount’s $31 per share acquisition offer in a preliminary vote, advancing the deal toward completion pending regulatory approval.
• How it impacts investors : The deal signals ongoing consolidation in the media and streaming industry, which could reshape competitive dynamics and scale advantages. Investors may need to reassess positioning as larger combined entities compete more aggressively for content and subscribers.
• Next steps : Use our Media and Entertainment screener to compare streaming and content players navigating consolidation.

💾 TSMC exits Arm investment with $231m share sale ( Reuters )

• What happened : TSMC sold its remaining 1.11 million shares in Arm Holdings for about $231 million, fully exiting its investment. The sale resulted in a $174 million impact on retained earnings and follows earlier partial disposals since Arm’s 2023 IPO.
• How it impacts investors : This move reflects shifting capital allocation priorities among major chip players and could influence sentiment around strategic partnerships in the semiconductor ecosystem. It also highlights how large investors are monetizing gains after strong post-IPO performance.
• Next steps : Explore semiconductor leaders and capital allocation trends using our Global Semiconductor screener .

🤖 Huawei forecasts 60% surge in AI chip revenue ( Reuters )

• What happened: Huawei expects revenue from its AI chips to increase by at least 60% this year, reaching about $12 billion based on existing orders. The growth is driven by strong demand from Chinese companies for domestic chip alternatives, with new processors already in mass production and further upgrades planned.
• How it impacts investors : Rising demand for domestic AI chips highlights ongoing shifts in global semiconductor supply chains and increasing regional self-reliance. This could reshape competitive dynamics in the AI hardware space and influence where capital flows within the sector.
• Next steps : Last week’s Market Insights talks heavily about how the Chinese government has stirred investment. Chinese AI chips were a result of strong fiscal support.

The latest impact of the Strait of Hormuz’s closure

The most immediate and visible impact of the strait’s closure was fuel prices.

But nine weeks into the war, government leaders like those in the UK are fighting even harder to get the strait reopened because the longer term impact of the closure is starting to expand into other industries.

👉 Last month, we covered the key industries and countries immediately impacted by the war , so we’ll focus on adding insights that weren’t there.

Yes, it started with energy and fertilizers

The Strait of Hormuz is one of the world’s most critical trade routes. Beyond oil, it carries around :

• 20% of global LNG
• ~30% of LPG
• Up to 30% of globally traded fertilisers
• A significant share of petrochemicals used in industrial production

That means the disruption is hitting the system in two ways at once.

On one hand, energy prices are rising. Oil and gas markets reacted almost immediately, pushing up costs across industries that rely on energy as a key input.

On the other hand, the physical flow of fertilizers through the strait has been disrupted. A meaningful portion of globally traded fertilizers typically moves through this route, and that supply is now constrained.

This creates a double squeeze:

1. higher production costs due to rising energy prices
2. reduced global supply due to trade disruption

Because fertilisers sit at the very beginning of the food supply chain, the impact doesn’t stay contained for long.

From inputs to food prices

We previously covered how the agricultural industry will be impacted, but the impact is now trickling down.

As fertiliser supply tightens and prices increase, farmers face higher costs to grow crops. Over time, that pressure will flow through to food production and distribution.

Economists expect we’ll later start to see the world’s food supply chain under pressure if the strait remains closed. Food inflation in countries like Australia has already begun, while other countries like the UK are expecting to feel the impact later in the year .

Groceries will also be impacted

Crops aren’t the only food product expected to be affected. Another area that governments are concerned about are packaged food and meat.

The derivative effect of higher gas prices is it’ll heavily impact the production of ammonia, whose by-product is CO2.

CO2 is used to prolong the shelf-life of food, create fizzy sodas, and plays a role in animal processing for meat products.

Unlike other commodities, CO2 is hard to store and is produced by an oligopoly of companies, which means a single plant closure will have a material effect. In a worst-case scenario, the UK government estimated that CO2 supply will fall to only 18% of usual capacity if the war were to continue.

The result isn’t necessarily widespread shortages, but reduced product availability, less variety on shelves, and further cost pressures across food and hospitality.

The global ripple effects

The consequences extend beyond developed markets.

Many countries that rely on fertilizer imports from the Gulf are also among the most vulnerable to rising food costs. Unfortunately, quite a number of these countries are some of the poorest in the world.

According to economists, a 10% reduction in fertilizer supply could reduce agricultural production in sub-Saharan Africa by as much as 25% .

Because many African countries depend heavily on agriculture, this has broader implications beyond food production and can increase pressure on vulnerable communities.

💡Long story short : we’re now starting to see the flow-on effects coming from the strait’s closure. This will impact us as consumers, but will also negatively impact industries reliant on food - the hospitality sector, food retailers, manufacturers of packaged food and drinks, etc.

See this screener listing companies in this specific sector.

Impact of the strait’s closure on company financials

Key trends backed by data have begun to emerge as companies start to post Q1 2026 earnings.

1. Major energy companies are benefiting from higher prices… for now

Oil majors have been among the most immediate beneficiaries. BP (LSE:BP) reported Q1 profits more than double the same period last year, driven by a surge in oil prices and strong trading performance during the conflict.

This is mainly because BP’s global operations and trading network allow it to capture value across the supply chain, from production through to distribution and trading.

However, note that this may just be the immediate impact as fuel companies like BP likely still have a stockpile of supply. The chart below shows profits squeezing as the Russia-Ukraine conflict dragged on.

2. Fertilizer producers with global supply chains are winning

The impact is also visible in fertiliser markets. Yara (OB:YAR) , a Norwegian fertilizer producer that supplies Europe and Asia, reported stronger Q1 earnings, 41% up YoY .

The company noted that the blockage of the Strait of Hormuz has contributed to supply shortages and higher prices.

Yara’s global production footprint and sourcing flexibility had allowed it to shift supply across regions and maintain output, even as some markets tightened.

Whether this continues remains to be seen, however the company notes that governments are likely to begin subsidizing fertilizer use for farmers, so negative impact for global fertilizer producers may be muted. Other fertilizer majors are yet to report Q1 earnings, but investors had already anticipated strong results.

3. Consumers are shifting to electrification

Higher fuel prices are beginning to shift consumer behaviour as consumers fight inflation.

Toyota’s Q1 2026 earnings released earlier this week showed that global EV sales rose 139% year-on-year in March as drivers looked for alternatives to rising petrol costs.

EV search volumes also increased across Europe, Asia and Australia - the latter specifically saw an increase of over 50 times .

As EV supplies tighten, this has become good news for Chinese manufacturers as EV shipments in the above countries surged since the war began.

Solar panel producers like First Solar have also produced strong Q1 2026 results as published on Thursday, with net income up 65% YoY. China, also a leading solar panel producer, saw double the amount of exports for it. Many consumers have shifted to renewable energy sources - using solar panels to charge EVs.

💡We have many resources for electrification research:

• Read our previous Market Insights on the 2026 state of the Renewables industry .
• Read last week’s Insights on China’s latest five-year plan - the strategy that transformed China’s state of electrification.
• See our custom-built screeners focused on the biggest names in the EV supply chain and renewables .

💡The Insight: Investors will do well to think ahead of the curve

It’s easy to see the first-order effects of the Strait of Hormuz closure, as evident in higher fuel and gas prices, but implications over the long-term are far more widespread and impactful.

Some industries like renewables and EVs already see the flow-through effect. Other industries like hospitality and food retail may take a bit longer, but will likely feel the effects of the closed trading route.

👉 For investors, this means the opportunity is not just in reacting to what’s already happening but in anticipating what comes next.

Key events next week

Tuesday

• 🇦🇺 RBA Interest Rate Decision
  • Forecast : 4.35%, Previous: 4.10%
  • Why it matters : A potential hike would signal the RBA is still concerned about inflation with implications for housing, consumer spending, and the AUD.

Thursday

• 🇦🇺 Balance of Trade (Mar)
  • Forecast : A$5B Previous : A$5.69B
  • Why it matters : Trade strength supports the Australian dollar. A narrowing surplus could reflect weaker global demand or softer commodity prices.

Friday

• 🇩🇪 Balance of Trade (Mar)
  • Forecast : €14B, Previous: €19.8B
  • Why it matters : Germany’s export engine is key for Europe. A weaker surplus could signal slowing global trade.
• 🇨🇦 Unemployment Rate (Apr)
  • Forecast : 6.7%, Previous: 6.7%
  • Why it matters : Stability in unemployment suggests a balanced labour market, but any uptick could pressure the BoC to ease.
• 🇺🇸 Unemployment Rate (Apr)
  • Forecast : 4.3%, Previous: 4.3%
  • Why it matters : A stable unemployment rate keeps the Fed in wait-and-see mode, but any surprise could shift rate expectations.

Saturday

• 🇨🇳 Balance of Trade (Apr)
  • Why it matters : China’s trade data offers a read on global demand and supply chains, with ripple effects across commodities and equities.

Many big names are due to report quarterly earnings next week:

• Berkshire Hathaway
• Palantir
• AMD
• Corteva
• Paypal
• Walt Disney
• Uber
• Shell
• McDonald's
• Airbnb

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

Simply Wall St analyst Stella and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.