Summary of this article
UNCTAD warns disruption in the Strait of Hormuz could affect global trade, energy markets and supply chains.
Rising energy, transport and fertiliser costs may push up food prices and increase cost-of-living pressures.
Ship traffic through the Strait has dropped by 97 per cent since the US-Israeli strikes on Iran began.
The United Nations has warned that escalating tensions in West Asia and disruptions in the Strait of Hormuz could pose serious risks to global trade, potentially driving up energy, transport and food costs worldwide.
A report by the UN Conference on Trade and Development (UNCTAD) said the ongoing military escalation following US-Israeli strikes on Iran and Tehran’s retaliation has already affected shipping flows through the Strait of Hormuz, one of the world’s most critical maritime chokepoints. The narrow waterway carries roughly a quarter of global seaborne oil trade as well as significant volumes of liquefied natural gas and fertilisers, according to PTI.
“The resulting ripple effects go far beyond the region, affecting energy markets, maritime transport and global supply chains,” the report said.
According to PTI, UNCTAD cautioned that rising energy, fertiliser and transport costs, including freight rates, bunker fuel prices and insurance premiums — could push up food prices and add to cost-of-living pressures, particularly for vulnerable populations.
“Higher energy, fertiliser and transport costs – including freight rates, bunker fuel prices and insurance premiums – may increase food costs and intensify cost-of-living pressures, particularly for the most vulnerable,” it said.
Stephane Dujarric, spokesman for UN Secretary-General Antonio Guterres, told the daily press briefing that UNCTAD’s economic assessment of a possible closure of the Strait highlights “significant risks to global trade and development”.
The report said disruptions in the Strait of Hormuz underline the “vulnerability" of major maritime chokepoints to geopolitical tensions and their ability to transmit shocks across supply chains and commodity markets.
It added that reducing risks to global trade and development, including environmental risks, requires de-escalation and the protection of maritime transport, ports, seafarers and other civilian infrastructure, while ensuring secure trade corridors in line with international law and freedom of navigation.
“Economic impacts, both globally and for the region, will depend on the duration, intensity and geographic scope of the tensions. Continued monitoring is essential to assess evolving risks and their potential impacts,” UNCTAD said.
The report also highlighted that many developing countries are already dealing with high debt service obligations, limited fiscal space and restricted access to finance. According to PTI, in such conditions, increases in energy, transport and food costs could strain both government finances and household budgets, raising economic and social pressures and complicating progress towards sustainable development.
UNCTAD data show that about 20 million barrels of oil per day — roughly 25 per cent of global seaborne oil trade — moved through the Strait of Hormuz in 2024. Of this total, crude oil and condensate accounted for around 14 million barrels per day, while petroleum products made up about 6 million barrels per day.
Data from a week before the latest escalation in West Asia showed that 38 per cent of global seaborne crude oil trade, 29 per cent of liquefied petroleum gas trade, and 19 per cent each of liquefied natural gas and refined oil products passed through the Strait, PTI reported.
Since February 28, when the first strikes against Iran were launched by the United States and Israel, ship traffic through the Strait of Hormuz has dropped by 97 per cent.
UNCTAD warned that disruptions in the waterway could particularly affect energy supplies to Asia. In 2024, around 84 per cent of the 14.3 million barrels of crude oil transported daily through the Strait was destined for Asian markets, while only 16 per cent went to Europe and other regions.
Similarly, about 83 per cent of the 10.4 billion cubic feet of liquefied natural gas shipped daily through the Strait was bound for Asia. The route is also crucial for fertiliser supplies, with around one-third of global seaborne fertiliser trade — roughly 16 million tonnes each year — passing through it.
Warning that the effects could spread widely, the UN agency said: “When oil prices go up, food prices often go up. When gas prices go up, fertiliser prices often go up.”
“The current shock comes at a time when many developing economies struggle to service their debt, face a tightening of fiscal space and limited capacity to absorb new price shocks,” it said.
(With inputs from PTI)
