The UN Trade and Development (UNCTAD) has warned that escalating military tensions in the Strait of Hormuz are disrupting one of the world’s most critical maritime chokepoints, with ripple effects threatening energy markets, maritime transport, and global supply chains.

According to UNCTAD’s Rapid Impact Analysis, the Strait carries around a quarter of global seaborne oil trade, as well as significant volumes of liquefied natural gas and fertilizers. The disruption has already pushed Brent crude prices above $90 per barrel, raising concerns about higher energy, fertilizer, and transport costs. These increases—spanning freight rates, bunker fuel, and insurance premiums—could drive up food prices and intensify cost‑of‑living pressures, particularly for vulnerable populations.

UNCTAD noted that similar repercussions were seen during the COVID‑19 pandemic and the early stages of the war in Ukraine, when shocks in energy, transport, and agricultural inputs spread rapidly across interconnected markets. The current crisis comes at a time when many developing economies face high debt burdens, limited fiscal space, and reduced capacity to absorb new price shocks.

The agency stressed that the overall impact will depend on the duration and scale of the disruption, but emphasized the need for continued monitoring. It highlighted the importance of safeguarding maritime transport, ports, seafarers, and civilian infrastructure, while maintaining secure trade corridors in line with international law and freedom of navigation.

UNCTAD warned that rising energy and food costs could strain public finances and household budgets in developing countries, complicating progress toward sustainable development and heightening socio‑economic pressures. (Newswire)

Read more: https://unctad.org/publication/strait-hormuz-disruptions-implications-global-trade-and-development?utm_source=facebook&utm_medium=social (Newswire)

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An Iranian Revolutionary Guards senior official said on Monday that the Strait of Hormuz is closed and Iran will fire on any ship trying to pass, Iranian media reported.

This is Iran’s most explicit warning since telling ships it was closing the export route on Feb 28, a move that threatens to choke a fifth of global oil flows and send crude prices sharply higher.

“The strait (of Hormuz) is closed. If anyone tries to pass, the heroes of the Revolutionary Guards and the regular navy will set those ships ablaze,” Mr Ebrahim Jabari, a senior adviser to the Guards commander-in-chief, said in remarks carried by state media.

The strait is the world’s most vital oil export route, which connects the biggest Gulf oil producers, such as Saudi Arabia, Iran, Iraq and the United Arab Emirates, with the Gulf of Oman and the Arabian Sea.

The closure was triggered by US and Israeli strikes on Iran on Feb 28 seeking to topple its leaders, with US President Donald Trump offering Iranians help in ousting the ruling clerics.

In response, Iran fired several barrages of missiles at its Gulf neighbours hosting US military bases such as Qatar, Kuwait and Bahrain. Tehran also fired missiles at the United Arab Emirates, Saudi Arabia and Oman.

With this closure, Tehran made good on years of threats to block the narrow waterway in retaliation for any attack on the Islamic Republic.

About 20 per cent of the world’s daily oil consumption passes through the Strait of Hormuz, which is about 33km wide at its narrowest point.

Oil markets have focused on tensions between Tehran and its old foes, the US and Israel, fearing that a full-blown conflict would disrupt supplies and destabilise the region.

The move also comes after global shipping had already experienced disruptions linked to drone and missile attacks carried out by Yemen’s Iran-aligned Houthi militants.

The group has targeted vessels in the Red Sea and the Gulf of Aden since the Gaza war broke out in 2023. (Straits Times)

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