The forest products industry was already navigating tariff headwinds and soft demand when the world changed on February 28, 2026. US-led military strikes on Iran under Operation Epic Fury triggered the swift near-closure of the Strait of Hormuz — and with it, the sharpest fuel and freight cost shock the industry has faced in years. From logging roads in the Pacific Northwest to sawmill yards in Scandinavia, the fuel freight costs hitting forest supply chains are now measurable, significant, and not fading fast.
Within days of the strikes, Brent crude surpassed $100 per barrel for the first time since 2022, reaching $112 to $126 per barrel by late March. Diesel — the lifeblood of every logging truck, forwarder, and forest haul road — hit a US national average of $5.375 per gallon by the week of March 23, a 41% increase from just one month earlier. The International Energy Agency called it “the largest supply disruption in the history of the global oil market.”
How the Iran Conflict Triggered a Global Fuel and Freight Shock
The Strait of Hormuz is the world’s most critical oil chokepoint, carrying roughly 20 to 21 million barrels of crude and petroleum products per day — about one-fifth of the global seaborne supply — along with nearly one-third of the world’s liquefied natural gas. When Iranian forces began targeting commercial vessels, tanker traffic dropped by approximately 70% within days, then fell to near zero. Over 150 ships anchored outside the strait waiting for the situation to clarify.
The economic consequences spread quickly. With Gulf crude flows collapsing by an estimated 10 million barrels per day, energy markets priced in prolonged disruption. Brent crude, which closed at $72.48 on February 28, climbed past $100 just eight days later — the fastest breach of that threshold in modern market history. Goldman Sachs warned that prices could move even higher if shipping disruptions persisted.
Beyond crude oil, the disruption rippled across the entire logistics chain. War-risk insurance premiums for vessels transiting the Persian Gulf surged from 0.125% to between 0.2% and 0.4% of ship insured value per trip — adding approximately $250,000 in costs per voyage for very large crude carriers. Shipping lines that continued operating imposed conflict surcharges across the board. Those that suspended operations in the region left cargo without a carrier.
Vessels redirected around the Cape of Good Hope added roughly 3,500 nautical miles and approximately one million dollars in additional fuel costs per voyage, while stretching Asia transit times by 10 to 14 days. The effective capacity of the global container fleet shrank as ships spent more time at sea on longer routes.
Diesel Prices Hit Logging and Trucking Operations Hardest
For forest sector operators, the most immediate pressure point is diesel. Nearly every tonne of wood that moves — from stump to mill, mill to port, port to end market — travels on diesel. Diesel prices above $5 per gallon represent a compounding cost hit: higher operating costs per shift for logging contractors, higher delivered wood costs for mills, and tighter margins on every haul.
Trucking industry analysts note that the Iran conflict sent diesel costs up nearly 30% from pre-conflict levels, directly compressing carrier margins at a time when the for-hire trucking market was already under pressure. Small fleet operators and independent owner-operators — who dominate forest product hauling in many regions — are hit especially hard, because spot market freight rates are typically negotiated “all-in” without a fuel surcharge carve-out. Many small operators recover only a fraction of higher fuel costs through elevated rates.
The result is accelerating pressure on carrier capacity just as mills and logging contractors need reliable, affordable hauls. Some analysts are warning of further carrier exits if diesel remains elevated, which would tighten haulage availability and push costs even higher.
This comes on top of supply chain pressures already created by US tariffs on Canadian and imported lumber, which have been reshaping North American forest sector trade flows since early 2025. The Iran conflict adds a second, global layer of cost pressure to an industry that was already navigating significant headwinds, and underscores how market turmoil can push forest producers to the brink when multiple shocks arrive simultaneously.
Container Freight Rates for Lumber Exports Surge Eightfold
The ocean freight market has been equally brutal for forest product exporters. Container freight rates for softwood lumber shipments to the Gulf jumped from roughly $500 per 40-foot container before the conflict to more than $4,000 — an eightfold increase in a matter of weeks. Even where vessels are still moving, they carry war-risk surcharges and elevated base rates that erode the margins on every export shipment.
The cargo insurance market has repriced aggressively. Marine premiums across the broader Persian Gulf and Red Sea region have surged, and coverage terms have tightened. For exporters, this is not just a cost issue: it is a reliability issue. Delivery timelines have become unpredictable, buyers are uncertain about arrival schedules, and some shipments that were in transit when the conflict began encountered complications at intermediate ports.
Across all sectors, supply chains are absorbing what analysts describe as a 40% average surge in cost-to-serve following major disruptions of this scale — a figure that reflects fuel, freight, insurance, and the operational costs of managing uncertainty and delay.
Nordic Sawmill Markets Face Chaos as Gulf Trade Routes Close
The disruption is particularly acute for European softwood producers. Europe supplies approximately one-third of global softwood lumber, with Sweden and Finland among the world’s largest exporters. The Middle East — served primarily through the Suez Canal and the Strait of Hormuz — is a key growth market for Nordic sawmillers, absorbing nearly 3 million cubic metres of softwood annually.
“Iranian attacks against industrial and logistical capacities in the Gulf will add up to the temporary drop in timber demand,” said Kirill Baranov, founder of Signals from the Wood, who also raised concerns about competitive pressure in North Africa as European and Russian lumber volumes are simultaneously redirected.
Marko Summanen, VP of Forest Value Chain Europe at ResourceWise, noted that European natural gas price spikes — Dutch TTF benchmarks nearly doubled to over €60/MWh by mid-March — are “suppressing industrial demand for paper mills as production costs soar,” adding a second vector of pressure beyond freight.
With Gulf routes disrupted, Nordic exporters face a difficult choice: absorb the cost of rerouting through the Cape of Good Hope, redirect volumes to European or North African markets where they will compete with each other and with Russian supply, or hold inventory and wait. All three options compress margins or defer revenue. The situation echoes the Red Sea/Houthi disruption of 2024, which the ResourceWise analysis notes was the first of two major logistics shocks to hit the Middle East timber trade within two years.
What the Supply Chain Disruption Means for North American Forest Producers
North American producers face a more mixed picture. On one hand, elevated fuel and freight costs are a direct operating burden — diesel for logging equipment, trucks, and long-haul transport is more expensive regardless of where the wood is going. On the other, the disruption to European export routes and Nordic market stability could, over time, benefit North American producers competing in Asian and domestic markets if European supply is redirected away from those destinations.
The key risk is duration. If the Strait of Hormuz remains effectively closed or heavily disrupted through the first half of 2026, shifts in global softwood trade flows could become structural rather than temporary. Buyers who scramble to secure alternative supply now may build new sourcing relationships that persist after the crisis passes.
For the near term, the practical reality is rising input costs at every link of the chain. Mills that purchase delivered wood will see higher costs as trucking contractors pass through fuel increases. Exporters will face higher freight rates on every ocean lane, not just routes through the Gulf. And the entire sector is absorbing an insurance and risk premium that did not exist two months ago.
The Iran conflict is a reminder that the forest products industry — despite its grounded, physical character — is deeply embedded in the global economy. When the world’s most critical oil shipping lane closes, the cost does not stay in the oil market. It travels, container by container and tractor-trailer by tractor-trailer, all the way to the mill gate.
