‘Higher food prices, cost-of-living likely: UN warns of ripple effects if Strait of Hormuz shuts amid Iran war
The United Nations on Tuesday warned of “significant risks” to global trade and development, including higher food prices and cost-of-living pressures, if the Strait of Hormuz remains closed amid the ongoing Middle East conflict.A report by the UN Conference on Trade and Development (UNCTAD) said the military escalation following US–Israeli strikes on Iran and Tehran’s retaliatory attacks has already disrupted shipping through Hormuz, one of the world’s most critical maritime chokepoints.
“The resulting ripple effects go far beyond the region, affecting energy markets, maritime transport and global supply chains. 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,” the report stated.UNCTAD emphasised that the situation underscores the vulnerability of key maritime chokepoints to geopolitical tensions and their potential to transmit shocks across supply chains and commodity markets. The UN agency noted that the economic impact of a prolonged blockade would depend on its duration, intensity, and geographic scope.“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,” the report added.According to UNCTAD, many developing countries already face high debt burdens, limited fiscal space, and constrained access to finance. Rising energy, transport, and food costs could further strain public finances and household budgets, heightening economic and social pressures and complicating progress toward sustainable development—especially in nations heavily dependent on imported energy, fertilisers, and staple foods.“When oil prices go up, food prices often go up. When gas prices go up, fertiliser prices often go up,” it warned, highlighting the far-reaching consequences of a potential prolonged closure of the Strait.Iran has vowed to block the water body “for as long as the war continues.”Why the Strait of Hormuz mattersThe narrow passage between the Persian Gulf and Gulf of Oman handles about a quarter of global seaborne oil trade, along with significant volumes of liquefied natural gas (LNG) and fertilisers.
Importance of Hormuz for global oil flows
According to UNCTAD, around 20 million barrels of oil per day passed through the Strait in 2024, including 14 million barrels of crude and condensate and 6 million barrels of petroleum products. Recent data showed that the Strait also carries 38% of global seaborne crude oil trade, 29% of LPG, and 19% each of LNG and refined products.Since February 28, when the US and Israel launched the first strikes on Iran, ship traffic through Hormuz has dropped by 97%, raising concerns about energy supplies—particularly to Asia. In 2024, 84% of crude oil transported through the Strait was destined for Asia, and 83% of LNG shipments were headed there. Around one-third of global fertiliser trade—roughly 16 million tonnes annually—also passes through Hormuz.
