The global economy is currently facing a moment of profound peril as one of its most critical arteries, the Strait of Hormuz, has been effectively severed by a rapid military escalation. A comprehensive and alarming report issued by the United Nations Conference on Trade and Development (UNCTAD) on 10 March 2026 reveals that ship transits through this narrow passage have come to a near halt, plunging from an average of 141 daily transits in February to just a handful of vessels in early March. This represents a staggering 97 percent drop in maritime activity, a disruption that UNCTAD warns will have ripple effects going far beyond the region, affecting energy markets, maritime transport, and global supply chains. The Strait is a vital passage for world trade, normally carrying around a quarter of global seaborne oil trade and significant volumes of liquefied natural gas and fertilizers. As shipping flows through this chokepoint are choked off, the implications for global trade and development prospects are becoming increasingly dire.
The immediate reaction of the energy markets has been swift and severe. According to UNCTAD, Brent crude oil prices have surged by 27 percent between 27 February and 9 March 2026, rising above 90 dollars per barrel to reach 91.8 dollars per barrel. The impact on natural gas is even more pronounced, with Dutch TTF Natural Gas Futures skyrocketing by 74 percent to 55.8 euros per megawatt hour in the same short window. These price spikes are not merely abstract market data; they represent a fundamental shock to the global energy supply, particularly for Asia, which relies on the Strait for 84 percent of its crude oil and 83 percent of its liquefied natural gas transported through the passage. In 2024, the Strait handled approximately 20 million barrels of oil per day, equivalent to 25 percent of all global seaborne oil trade, making its closure an event of unprecedented economic magnitude.
The UNCTAD report highlights a dangerous historical correlation that suggests this energy crisis will quickly transform into a global food crisis. Analysis of data from 1990 to 2026 shows that when oil prices go up, food prices often follow suit. This propagation occurs because disruptions in energy and transport costs—including freight rates, bunker fuel prices, and insurance premiums—directly increase the cost of producing and moving food. Similar repercussions were observed during the COVID-19 pandemic and at the start of the war in Ukraine, proving how interconnected markets allow shocks in agricultural inputs to spread rapidly. For the most vulnerable populations, these rising costs intensify cost-of-living pressures and could lead to heightened social and economic instability.
Further complicating the food security outlook is the massive disruption to the fertilizer trade. UNCTAD reports that one-third of global seaborne trade in fertilizers passes through the Strait of Hormuz. In 2024, the Persian Gulf region exported 16 million tonnes of fertilizers by sea, with Urea accounting for 67 percent of that volume, followed by Diammonium phosphate at 20 percent and Monoammonium phosphate at 9 percent. The report warns that access to these essential agricultural inputs may worsen for some of the world’s poorest countries. Sudan, for instance, relies on the Persian Gulf for 54 percent of its seaborne fertilizer imports, while Sri Lanka and Tanzania rely on the region for 36 percent and 31 percent, respectively. Even developed nations are not immune, with Australia and New Zealand sourcing 32 percent and 26 percent of their fertilizers from the region.
The logistics of global shipping are also in a state of chaos, with freight costs for shipping oil soaring to historic highs. Between 27 February and 6 March 2026, the Baltic Exchange Clean Tanker Index, which tracks the cost of shipping refined petroleum products, surged by 72 percent. The Dirty Tanker Index, primarily covering crude oil transport, rose by 54 percent in the same period. Simultaneously, the cost of the marine fuel used by ships—known as bunker fuel—has nearly doubled in Singapore, the world’s largest bunkering port. High-sulphur fuel prices jumped by 100 percent to 874 dollars per tonne, while low-sulphur fuel rose by 99 percent to 1,020 dollars per tonne. These skyrocketing operational costs are being further inflated by war risk insurance premiums, which have quadrupled for vessels in the Middle East. A typical 100 million dollar vessel that previously faced a 250,000 dollar insurance cost per voyage now faces a staggering 1,000,000 dollar premium.
This crisis is unfolding at a time of extreme financial fragility for many developing economies. UNCTAD notes that many of these nations are already struggling to service their existing debt and face a tightening of fiscal space, leaving them with limited capacity to absorb new price shocks. The military escalation has already led to an uptick in bond yields for regional economies between late February and early March. For example, Iraqi bond yields rose from 6.4 percent to 7.1 percent, and Bahraini yields climbed from 6.3 percent to 7.0 percent. Increased borrowing costs add a heavy potential economic burden to an already strained global system. For economies heavily dependent on imported energy, fertilizers, and staple foods, these combined pressures could strain public finances to the breaking point and complicate any progress toward sustainable development.
The UNCTAD report emphasizes that the disruption in the Strait of Hormuz underscores the extreme vulnerability of critical maritime chokepoints to geopolitical tensions. The agency asserts that reducing risks to global trade and development requires immediate de-escalation and the safeguarding of maritime transport, ports, and seafarers. Secure trade corridors must be maintained in line with international law and the principle of freedom of navigation. While the ultimate global economic impact will depend on the duration, intensity, and geographic scope of the current tensions, UNCTAD insists that continued monitoring is essential to assess these evolving risks. Without a swift resolution, the “ripple effects” of this narrow passage’s closure may leave no corner of the global economy untouched
