Author: Andrea Little Limbago, PhD, SVP, Applied AI
For decades, supply chains globalized and hyperspecialized without much consideration for geopolitics. Times have changed. On top of the horrific human toll, Russia’s invasion of Ukraine surfaced global supply chain exposure to conflict. From agriculture to energy to key metals, the Russian invasion caused significant global supply chain disruptions. Unfortunately, conflict and instability are not limited to Russia’s invasion. Conflict in Sudan shocked gold markets, protests in Canada and India disrupted the automotive and agricultural supply chains, and the Tigray War devastated manufacturing and crops.
Geopolitical Risks: The Foundation for Commercial Strategy
In 2017, only 13% of executives had taken active steps to offset their geopolitical risk. Just-in-time strategies focused on hyper-efficiencies that fueled economic interdependence, with minimal consideration of national boundaries. In contrast, a 2023 survey found that 97% of CEOs are adjusting their investment strategies due to geopolitical risks.
Recently, Taiwan has garnered much attention due to its critical role in the semiconductor industry, and its exposure to broader conflict in the region, including a potential invasion from China. Many steps are underway to build greater supply chain resilience in case of future disruption, such as TSMC’s efforts underway to build 30% of advanced chips in the United States, and naval presence in the Taiwan Strait is expanding both from NATO as well as China.
With many eyes focused on Taiwan, less attention has been paid to other global supply chain choke points which similarly present a significant risk of disruption due to conflict. The Strait of Hormuz is at elevated risk of closure as the Israel/Iran conflict navigates between ceasefire and missiles. Roughly 20 million barrels of oil pass through the Strait daily, with the majority of the crude oil and liquefied natural gas flowing to Asia. Due to various Western sanctions and other ties, it is unsurprising that China is the largest buyer of Iranian oil, and uniquely vulnerable economically if the conflict deepens.
The Strait of Hormuz: Oil, Gas, Diamonds and Apparel Trade at Stake
A blockade of the Strait of Hormuz would have global implications beyond oil and gas. Looking at trade data focused on Iran, Iraq, Qatar, Kuwait, Saudia Arabia, and the United Arab Emirates, there have been roughly 3 million shipments exported and imported since the start of 2025, representing over 100,000 companies. The charts below also highlights major product categories beyond oil and gas that are reliant on the Strait of Hormuz. India is driving much of the demand for diamond imports and exports.
India and the US are the countries most exposed to disruption of exports, with companies receiving 76% and 12% of total shipments from these countries surrounding the Strait of Hormuz.
Other Choke Points at Risk
This should be a wake up call to get ahead of other global choke points at risk of geopolitical crossfires. Over $3.5T worth of global trade passes through the Strait of Malacca between Indonesia, Singapore, and Malaysia annually. This area is not immune to disputes and is a strategic corridor for both India and China, as well as broader naval confrontations in the region. China would be hit hard by a blockade, as 2/3 of their maritime trade passes through the Strait. But China would not be alone, and global repercussions would be felt from the tech industry to agriculture.
The Panama Canal rounds out the top three global supply chain choke points. The Panama Canal has recently been a source of contention between the United States and China as well as a source of domestic unrest.
According to interos.ai’s future conflict assessment, Colombia is among the top ten countries at risk of future conflict. Much of current instability is focused in areas along the western portion of the country and includes regions where the government declared an internal state of unrest earlier this year. Given the Canal’s geographically proximity to what is currently localized conflict in Colombia.
Similarly, the Spratly Islands – a contested archipelago in the South China Sea – also ranks among the top areas at risk of future conflict. These islands are also critical to maritime traffic in the region, with shipping lanes transporting 85% of China’s trade.
Integrating Geopolitics into Supply Chain Strategies….and the Boardroom
If Russia’s invasion of Ukraine and US-China supply chain warfare were not enough of a wakeup call to integrate geopolitics into corporate supply chain strategies, the tenuous nature of the Strait of Hormuz is yet another reminder that supply chains and geopolitics are tightly interwoven. As Taiwan has proven, reshoring and diversification after decades of optimization and integration is easier said than done. Gaining global visibility on alternative companies and countries is paramount, as is prioritizing those key products and components that are most critical to business.
interos.ai will continue to monitor the situation and forecast future hot spots to help organizations prepare for this era of uncertainty.