UN Warns Strait of Hormuz Closure Could Trigger Global Food and Energy Price Surge
Report says disruption in the key shipping route could raise fuel, transport and food costs worldwide, worsening the cost-of-living crisis.
The United Nations has warned that a potential closure of the Strait of Hormuz could significantly disrupt global trade and lead to higher food prices and rising living costs around the world.
In a report released on Tuesday, the United Nations Conference on Trade and Development (UNCTAD) said escalating tensions in West Asia, including military strikes by the United States and Israel on Iran and Tehran’s retaliation, have already disrupted shipping activity through the crucial maritime passage.
The Strait of Hormuz is one of the most important global shipping routes, carrying roughly a quarter of the world’s seaborne oil trade. It also handles large volumes of liquefied natural gas and fertilisers that are vital for global agriculture and industry.
According to the report, disruptions in the waterway could create ripple effects far beyond the region, affecting energy markets, shipping costs and international supply chains.
Higher energy prices, rising freight charges and increased insurance premiums for shipping could ultimately push up food prices and intensify cost-of-living pressures, particularly in vulnerable economies.
Speaking at a daily briefing, Stephane Dujarric, spokesperson for UN Secretary-General Antonio Guterres, said UNCTAD’s analysis highlights “significant risks to global trade and development” if the situation worsens.
The report noted that critical maritime chokepoints like the Strait of Hormuz are highly vulnerable to geopolitical tensions, and disruptions there can quickly send shocks across global supply chains and commodity markets.
UNCTAD also emphasised the need for de-escalation of tensions and the protection of maritime transport, ports, seafarers and other civilian infrastructure. Ensuring secure trade routes in accordance with international law and freedom of navigation remains essential, the report said.
The economic impact of the crisis will depend on how long the tensions last and how widely they spread geographically, the agency added.
Data cited in the report shows that about 20 million barrels of oil per day — around 25 percent of global seaborne oil trade — passed through the Strait of Hormuz in 2024. Of this, about 14 million barrels per day consisted of crude oil and condensate, while another 6 million barrels were petroleum products.
Shipping data also indicates that before the latest escalation, nearly 38 percent of global seaborne crude oil trade, 29 percent of liquefied petroleum gas trade, and 19 percent each of liquefied natural gas and refined oil products passed through the narrow waterway.
However, since February 28, when the first strikes against Iran were reportedly launched by the United States and Israel, ship traffic through the Strait has dropped sharply, with UNCTAD estimating a decline of nearly 97 percent.
The disruption could particularly affect Asian economies. In 2024, about 84 percent of the crude oil transported through the Strait of Hormuz was destined for Asian markets, while only 16 percent went to Europe and other regions.
Similarly, around 83 percent of the liquefied natural gas shipments moving through the strait were headed to Asia. The route is also crucial for fertiliser trade, with nearly one-third of global seaborne fertiliser shipments — about 16 million tonnes annually — passing through the waterway.
UNCTAD warned that rising energy prices can quickly translate into higher food costs because fuel is essential for transport and agricultural production, while higher gas prices often lead to more expensive fertilisers.
The report added that many developing countries are already facing heavy debt burdens, limited financial resources and restricted access to funding. In such circumstances, rising energy, transport and food costs could further strain public finances an
