More than an oil story: Supply change challenges around the Strait of Hormuz

By John Kenney, Cotney Consulting Group. 

Learn how geopolitical conflicts are impacting material costs, supply chains and more in the roofing market. 

For many people in the U.S., gas costs have been top of mind with the conflict in Iran disrupting oil distribution. However, the cost of this type of disruption extends far beyond the pump. Specifically, we have seen a shift in global energy logistics, shipping routes and industrial supply changes as the conflict impacts the Strait of Hormuz.  

This is not the first time geopolitics have disrupted these systems. And in the past, it has led to higher material costs, tighter supply chains and greater uncertainty in bidding and project planning. Keep reading to learn more about this ongoing situation and what contractors should do to prepare from John Kenney, the CEO of Cotney Consulting Group. 

The moment energy markets shifted 

The Strait of Hormuz normally carries roughly one-fifth of the world’s oil and liquefied natural gas shipments. When traffic through that corridor becomes disrupted, the ripple effects extend far beyond energy markets. 

Recently, several Gulf energy producers have declared force majeure on shipments due to the inability to safely move product through the region. In energy markets, that declaration carries a simple meaning: Producers cannot deliver contracted supply due to extraordinary circumstances such as war or shipping disruptions. 

Once force majeure declarations begin, the issue is no longer speculation. It signals that the system responsible for moving energy resources is breaking down. 

At the same time, industrial signals are starting to appear. One example came from Aluminium Bahrain (Alba), the world’s largest single-site aluminum smelter, which recently reduced output by nearly 20 percent because raw materials could no longer be replenished through disrupted shipping routes. 

This is the point where global events begin transitioning from headlines into supply chain realities. 

Why construction supply chains follow energy disruptions 

Energy logistics sit at the foundation of modern industrial production. When oil shipping, petrochemical production or maritime freight becomes unstable, construction materials eventually follow. 

The construction industry sits several layers downstream from energy markets. That means the first signs of disruption appear elsewhere before contractors see price increases. 

The sequence typically looks like this: 

1. Energy markets become volatile. 
2. Shipping routes become restricted or more expensive. 
3. Industrial producers adjust output. 
4. Material manufacturers increase prices or extend lead times. 
5. Contractors feel the effects months later. 

We are now seeing the early stages of that process. 

Materials contractors should be watching 

Several construction materials are particularly exposed to energy and shipping disruptions. 

Asphalt and roofing products are closely tied to oil refining. When crude supply chains tighten or refineries shift production priorities, asphalt supply can shrink quickly. Roofing membranes, built-up roofing asphalt and paving materials often feel these changes within a few months. 

Aluminum is another vulnerable material. Modern construction relies heavily on aluminum for curtain wall systems, flashing, HVAC components and architectural framing. When global smelters face raw material shortages or energy costs rise, aluminum pricing tends to move rapidly. 

Petrochemical-based materials are also exposed. Many roofing membranes, insulation products, coatings and adhesives rely on petrochemical feedstocks produced in the Middle East and Gulf Coast. Supply disruptions can affect these materials within a 60- to 90-day window. 

Copper and electrical materials may follow later. Copper processing relies on industrial chemicals and global shipping logistics. If those systems tighten, electrical components and wiring systems used in construction can see price increases. 

Finally, insulation materials such as polyiso and spray foam depend on petrochemical derivatives. When those feedstocks become constrained, insulation pricing can adjust quickly. 

None of these changes happen overnight. But they rarely occur in isolation either. 

The timeline contractors should expect 

Projected timeline showing how energy disruptions can move from oil markets to construction material pricing over a 30–180 day period.  

Construction material impacts typically unfold in stages following energy disruptions. 

• 0–30 days – Market volatility 
  Energy markets react first. Oil prices fluctuate, tanker traffic becomes uncertain and freight rates increase as shipping companies reroute vessels or charge war-risk insurance premiums. 
• 30–90 days – Supply chain tightening 
  Industrial supply chains begin to adjust. Petrochemical feedstocks tighten, asphalt supply becomes more volatile and insulation and coating manufacturers may begin issuing price notifications. 
• 90–180 days – Construction cost adjustments 
  Material price increases begin appearing in contractor bids and project budgets. Aluminum, copper and fabricated systems often see adjustments as global supply chains recalibrate. 

This timeline isn’t exact, but historically it reflects how energy disruptions move through industrial supply chains. 

What contractors should be doing now 

Most contractors cannot control global events, but they can control how they respond to early signals. 

First, pay attention to supplier communications. Price increase notices often appear before broader market reports. Staying in close contact with suppliers can provide early warning of material volatility. 

Second, review contract language related to price escalation. In periods of uncertainty, clearly defined escalation clauses can help manage risk for both contractors and project owners. 

Third, monitor key materials tied to energy markets, including asphalt, petrochemical-based products and aluminum. These materials often move earlier than structural components. 

Finally, communicate with clients about potential supply chain risks. Owners appreciate transparency when contractors explain the factors influencing project pricing and timelines. 

Looking ahead 

Wars rarely remain confined to battlefields. They reshape supply chains, alter trade routes and introduce new uncertainties into global markets. For contractors, the key issue isn’t predicting geopolitics. It’s recognizing how global disruptions eventually translate into local material costs. 

The construction industry may not feel the full effects immediately. But when energy logistics shift, construction materials usually follow. The companies paying attention now will be better positioned when the next round of pricing adjustments arrives. 

Original article source: Cotney Consulting Group