Iran Crisis Closes Hormuz: What It Means for FBA Landed Costs
The Strait of Hormuz is shut, oil hit $91, and freight surcharges are stacking. Here is how Operation Epic Fury reprices every cost line for Amazon FBA importers.
On February 28, the US and Israel launched "Operation Epic Fury," a coordinated strike campaign against Iran's military infrastructure, nuclear facilities, and senior leadership. Iran retaliated with 500+ ballistic missiles and 2,000+ drones targeting Israel, US bases across the Gulf, and civilian port infrastructure including Jebel Ali (Dubai) and Kuwait's port facilities.
By March 2, the IRGC declared the Strait of Hormuz closed. Within days, five major marine insurers (Gard, Skuld, NorthStandard, the London P&I Club, and the American Club) withdrew war-risk coverage for any vessel entering the Persian Gulf. Without insurance, transit became economically impossible. Traffic dropped 90% from pre-strike levels.
If you're an FBA seller who imports products, this conflict touches every single cost line between your factory and your customer's doorstep. We've been running numbers on the impact all week. Here's what we're seeing.
The freight rate situation
Here's the counterintuitive part: ocean freight rates going into this crisis were near their lowest since December 2023. Massive fleet overcapacity (the global container fleet grew 5% in 2026 against only 3% demand growth) had pushed rates down hard. The Drewry World Container Index sat at $1,958/FEU on March 5. China-to-US West Coast was at $1,843/FEU.
Those numbers are already moving. Shanghai-to-Los Angeles jumped 10% week-over-week to $2,402/FEU. Shanghai-to-New York rose 7% to $2,977. And these readings only captured the first few days of the closure. The full repricing hasn't hit yet.
The mechanism is vessel repositioning. When carriers reroute all Middle East traffic around the Cape of Good Hope (adding 10 to 14 days and roughly $1 million in fuel per voyage), it absorbs the overcapacity that was keeping rates low globally. Containers get stranded at wrong ports. Equipment shortages cascade. Lars Jensen of Vespucci Maritime warned at TPM 2026: "If this lasts more than just a few days, that will result in upwards pressure on Asia-Europe rates; if you get congestion in Asia, upwards rates even on the transpacific."
War-risk surcharges are stacking on top of base rates:
- Hapag-Lloyd: $1,500/TEU (standard), $3,500 for reefer/special
- CMA CGM: $2,000/TEU emergency conflict surcharge, $3,000/FEU
- MSC: Up to $4,000/container war surcharge plus $800 deviation surcharge
- Maersk: $1,800/TEU emergency freight increase, $3,000/FEU
For sellers sourcing from Turkey, India (western ports), or any Middle Eastern supplier, that's $1,500 to $4,000 per container on top of the base rate. Even for China-to-US shippers, the indirect pressure means planning around $2,500 to $3,500/FEU for West Coast and $3,500 to $4,500/FEU for East Coast within weeks if the conflict drags on.
On insurance: pre-crisis war-risk premiums for Persian Gulf transit ran about 0.125% of hull value. That number is meaningless now since coverage has been pulled entirely. For Red Sea transit, premiums will spike back toward the 0.5 to 1.0% range as Houthi resumption threats return. For a $100 million vessel, that's $200,000 to $1,000,000 per transit, and carriers pass those costs directly to shippers.
Oil at $91 hits everything with a 4 to 8 week lag
WTI crude surged 35.6% in one week to $90.90/barrel, the largest weekly gain since futures trading began in 1983. National average gasoline jumped from $2.99 to $3.25 per gallon, with analysts projecting $3.50 near-term and $4+ if the Strait stays closed.
For FBA sellers, oil matters far beyond shipping fuel surcharges. It flows into plastics and resins (polyethylene, polypropylene, which are the building blocks of poly bags, bubble wrap, and blister packs), into manufacturing energy costs at overseas factories, and into last-mile delivery costs that Amazon absorbs today but may not absorb tomorrow. The typical lag is 4 to 8 weeks from crude spike to input cost repricing.
The dollar is offering a partial offset. The DXY surged to roughly 99 on safe-haven demand. Against the Chinese yuan, the dollar buys slightly more than a month ago (USD/CNY at 6.89 to 6.91, versus a February low of 6.84). But these currency tailwinds are modest, maybe 1 to 2%, against input cost pressures running in double digits.
Meanwhile, consumer confidence hit 84.5 in January (lowest since May 2014, below COVID lows). February employers shed 92,000 jobs. Retail sales are flat. Rising gas prices will accelerate the pullback in discretionary spending. So you're looking at demand softening at the exact moment costs are spiking. That's the worst possible margin squeeze.
The tariff and fee layers on top of this
We're not going to rehash the full tariff picture here because we've already covered it in detail. But the quick summary: the SCOTUS ruling that killed IEEPA tariffs left a Section 122 replacement at 15%, capped for 150 days (expiring around July 24). For Chinese imports, Section 301 tariffs at 7.5 to 25% still stack on top, putting typical total rates at 20 to 38%.
On the Amazon side, FBA fulfillment fees rose an average $0.08/unit in January, with some size tiers seeing increases above $0.50/unit. Amazon also eliminated FBA prep services entirely, pushing sellers to external providers at $0.85+/unit (up from Amazon's old $0.55 price). The new low-inventory-level fee now calculates at FNSKU level, requiring 28+ days of supply per variation.
The Iran conflict stacks on top of all of this. It doesn't replace these costs. It adds to them.
What this means for your landed cost math
Run some numbers with us. A product importing from China at $5 FOB now faces roughly $1 to $1.50 in tariff costs, $3.22+ in FBA fulfillment fees, $0.85+ in external prep, plus storage, returns, and advertising. That was already tight. Now add freight rates climbing 30 to 60% from their recent lows, plus petroleum-driven input cost increases on packaging and manufacturing energy.
For a product with a $3 margin, these combined pressures can erase profitability entirely. That's not speculation. That's arithmetic. Plug your actual numbers into our calculator and see where you stand right now, not where you stood last month.
The impact hits in three waves. Wave one (now through mid-April): fuel surcharges, war-risk premiums, and carrier rate increases hit landed costs within 2 to 4 weeks. Wave two (April through June): petroleum-derived input costs (plastics, resins, packaging) reprice with a 4 to 8 week lag. Wave three (June onward): demand erosion as $3.50+ gasoline, rising unemployment, and recession-level confidence compress the revenue side.
What to do about it
Active sellers have dropped from 2.4 million in 2021 to 1.65 million at end of 2025. New seller registrations hit 165,000 last year, the lowest in a decade. The sellers who exit leave behind less ad competition, more organic visibility, and more traffic per remaining seller. That's the opportunity here, if you survive the cost squeeze.
Lock in freight contracts now. If you have volume, negotiate fixed rates before the full repricing hits transpacific lanes. Even partial rate locks beat spot market exposure in a disruption like this.
Diversify at least one sourcing country. Mexico stands out: USMCA-qualifying goods face zero Section 122 surcharge, lead times compress from months to days, and the peso is stable. Vietnam offers labor costs 55% below China. India's rupee weakness makes sourcing attractive, though its Gulf oil dependence creates manufacturing-cost risk from this specific conflict.
Fix your inventory positioning. Don't panic-load FBA. Stage bulk inventory at external 3PLs or AWD (which doesn't count against FBA capacity limits), and drip-feed into FBA to maintain the 28-day supply minimum. AWD's "Smart Storage" rate of $0.43/cu ft requires 70+ days combined inventory and 70%+ auto-replenishment usage.
Recalculate every SKU's landed cost today. Not next week. Today. The duty stacking math has shifted for every origin country, and now freight and packaging costs are shifting too. Products that were marginally profitable last month may be underwater now. Kill the losers before they drain cash. Double down on the winners.
Watch the size-tier cliffs. Products priced just above $50 absorb the steepest FBA fee jumps. Products requiring certifications or complex prep naturally deter low-quality competitors. Heavy and bulky items face disproportionate fulfillment and shipping cost increases. These structural factors matter more than ever when every dollar of margin is under pressure.
The one upside: if this resolves quickly, freight rates snap back to the overcapacity-driven lows that preceded it. Bank of America models oil returning to $60 to $70/barrel on a quick resolution. But Iran's foreign minister rejected ceasefire on March 6, and there's no visible off-ramp. Plan for disruption lasting weeks, not days.
The sellers who treat logistics and trade policy as core strategy (not back-office functions) are the ones scaling right now. Everyone else is showing up in the attrition statistics. Run your numbers, make your moves, and don't wait for stability to return. It won't.