Strait of Hormuz disruptions: Implications for global trade and development

The Strait of Hormuz is one of the world’s most critical maritime chokepoints.

“The Strait of Hormuz is one of the world’s most critical maritime chokepoints, carrying around a quarter of global seaborne oil trade and significant volumes of liquefied natural gas and fertilizers”

UN Trade and Development (UNCTAD)

It carries around a quarter of global seaborne oil trade and significant volumes of liquefied natural gas and fertilizers.

UN Trade and Development (UNCTAD)

The ongoing military escalation in the region has disrupted shipping flows through this narrow passage.

The resulting ripple effects go far beyond the region, affecting energy markets, maritime transport and global supply chains.

UN Trade and Development (UNCTAD)

Oil markets have reacted quickly, with Brent crude prices now rising above $90 per barrel.

Higher energy, fertilizer 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.

“The Strait of Hormuz is one of the world’s most critical maritime chokepoints, carrying around a quarter of global seaborne oil trade and significant volumes of liquefied natural gas and fertilizers”

UN Trade and Development (UNCTAD)

Similar repercussions were observed during recent global shocks, including the COVID-19 pandemic and at the beginning of the war in Ukraine.

Those events showed how disruptions in energy, transport and agricultural inputs can propagate across interconnected markets.

The current shock comes at a time when many developing economies struggle to service their debt, tightening fiscal space and limited capacity to absorb new price shocks.

Overall global economic impacts will depend on the duration, intensity and geographic scope of the tensions, and the situation highlights the importance of continued monitoring, particularly implications for vulnerable economies.

UN Trade and Development (UNCTAD)

Reducing risks to global trade and development requires de-escalation and safeguarding maritime transport, ports and seafarers, and other civilian infrastructure, while maintaining secure trade corridors in line with international law and freedom of navigation.

Socio-economic implications for developing economies could include strained public finances and increased pressure on household budgets, particularly in economies heavily dependent on imported energy, fertilizers and staple foods.