The ongoing disruption of shipping activities through the Strait of Hormuz, one of the world’s most strategic energy corridors, is creating significant economic risks for vulnerable economies and could worsen inflationary pressures, fuel costs and trade challenges across developing countries, according to a new report released by the United Nations Conference on Trade and Development (UNCTAD).
UNCTAD noted that the disruption has already triggered sharp increases in global oil and refined petroleum product prices, raising concerns over the economic impact on countries that depend heavily on imported energy. The report warned that continued instability in the region could significantly increase import bills, worsen inflation, strain public finances and slow economic growth in vulnerable economies.
The organisation revealed that 65 of the 75 vulnerable economies assessed are net importers of oil, making them particularly susceptible to rising energy costs. According to the report, a sustained oil price surge could increase the annual oil import bill of these economies by more than $20 billion, affecting nearly one billion people worldwide.
For Nigeria, the development comes at a time when inflationary pressures remain elevated and businesses continue to grapple with high operating costs. Analysts believe that any prolonged disruption in the Strait of Hormuz could push up international crude oil prices, resulting in higher domestic fuel costs, transportation expenses, logistics charges and imported inflation.
The Strait of Hormuz handles approximately one-fifth of global oil shipments and remains one of the most important routes for the movement of crude oil, liquefied natural gas and fertiliser products. Since disruptions began earlier this year, global energy markets have experienced heightened volatility, with ripple effects extending across maritime transport, supply chains and food production systems.
UNCTAD stressed that rising oil prices have implications beyond energy markets. Higher fuel costs raise freight rates and transportation costs, broadening inflation across economies. The report further noted that many developing countries face difficult choices between funding essential public services and absorbing rising fuel import costs.
The global trade body also warned that fertiliser supply chains are increasingly vulnerable to the crisis, raising concerns about agricultural productivity and food security. Fertiliser prices have risen alongside energy costs, potentially adding further pressure to food prices in import-dependent economies.
Quoting UN Secretary-General António Guterres, the report captures the human cost of the shipping standstill: “When the Strait of Hormuz is strangled, the world’s poorest and most vulnerable cannot breathe.”
According to UNCTAD, sustained disruptions could weaken exchange rates, widen current account deficits, tighten credit conditions and slow economic growth, particularly in countries with limited fiscal buffers. The organisation therefore called for close monitoring of energy markets, supply chains and economic conditions as governments seek to mitigate the impact of the crisis.
While global markets continue to assess the evolving geopolitical situation, the report highlights the growing interconnectedness of energy security, trade stability and economic resilience. For Nigeria and other emerging economies, the developments underscore the importance of strengthening domestic energy security, improving supply chain resilience and accelerating reforms aimed at reducing vulnerability to external shocks.
