Strait of Hormuz crisis, oil shocks, and the $160 billion tariff refund window

Executive overview

Military action has effectively closed the Strait of Hormuz, disrupting oil, fertilizer, and air freight while container shipping faces a secondary hit as ships abandon Red Sea routes again. The US is relatively insulated but not immune — oil price spikes ripple into everything from semiconductors to food production.

Flexport CEO Ryan Peterson argues that tariff refunds from the Supreme Court ruling are near-certain, but most companies haven't even filed. He also sees AI agents as a deeper transformation than any trade crisis — and a strategic moat for operators over pure SaaS players.

Global trade interdependence is not abstract: close one chokepoint and semiconductors, fertilizer, and fuel all fail together.

Hormuz closure: what's actually disrupted

• Air freight is the hardest hit — Middle Eastern carriers hold 15–20% of global cargo capacity; Dubai is the world's largest cargo airport
• Air freight prices have doubled since the conflict began; even Pacific routes (Vietnam to US) are up 50–60%
• United Airlines modelling $11 billion in additional fuel expense
• Container shipping impact is relatively minor — the Persian Gulf is a cul-de-sac, ships don't need to transit it
• 57 container ships stranded inside the Strait; many more had cargo offloaded at random ports with seven-day free storage windows before fees kick in
• Ships that had just returned to the Red Sea in February (post-Houthi ceasefire) have immediately rerouted around Africa again

Oil and downstream effects

• Fertilizer shortage is an underreported risk — planting season disruption could cause major food production failures
• 30% of the world's helium supply comes from Qatar — required for semiconductor manufacturing and rocket launches
• Countries like the Philippines get 96% of their oil via the Strait; allies across the Pacific face genuine shortages
• The US is the world's largest oil producer and will see high prices but not shortages; Texas and energy producers benefit
• California faces specific exposure: refineries closed for climate reasons; oil imported from South Korea, which sources from the Middle East
• Trump suspended the Jones Act for oil, benefiting Hawaii and Alaska by allowing non-US ships to transport between US ports

Tariff refunds: the $160 billion opportunity most companies are missing

• The Supreme Court struck down Trump's IEEPA tariffs; CBP identifies 330,000 companies owed refunds
• Only 6% of eligible companies have entered their bank details to receive payment
• Flexport's view: refunds will be paid — timing and process are the uncertainty, not whether they're owed
• A secondary market now exists: hedge funds buying claims above $10M at 70+ cents on the dollar (implying ~40% return within two years)
• Flexport is building a fund to extend this financing option to companies with claims below $10M
• New tariffs filed under Section 122 and 80+ active investigations by Commerce/USTR restart the legal fight under different statutes; the IEEPA 10% rate has a 150-day limit expiring July 24

AI as operational advantage

• Flexport deployed an AI customs compliance agent in October that audits 100% of entries before filing — error rate dropped from 1.8% to 0.2%
• The result triggered a company-wide AI agent initiative across all operations, running November through February
• Ryan codes himself; uses X's AI-filtered feed to cut noise and stay current on new model releases
• His view: every company will be replaced by those better at AI — the threat is real for Flexport too if they don't lead it themselves
• AI favours operators over pure SaaS: freight forwarding relationships with carriers, ports, and governments can't be automated away; when the AI fails, the shipment still has to move
• Large foundational model companies have approached Flexport to "forward deploy" onto their teams; Flexport declines — the dark art of freight forwarding is a moat they're unwilling to teach

Supply chain outlook

• No return to predictability expected: Hormuz, Red Sea, Panama Canal (drought, 2024), potential Taiwan disruption — choke points are structurally fragile
• The right operating posture is permanent uncertainty management, not waiting for stability
• Flexport's edge over 125-year-old competitors is speed of decision and willingness to take action — tariff refund fund went from phone call to term sheet in 24 hours