The United Nations warns: Closing the Strait of Hormuz portends a shock in food prices
A recent UN report warned that closing the Strait of Hormuz would not only lead to higher energy prices, but would also raise food and fertilizer prices, which could severely harm poor countries.
An analysis conducted by the United Nations Trade and Development Organization stated that the impact of rising costs Energy, fertilizers, and transportation, as well as shipping rates and insurance premiums, are likely to "It increases food prices and exacerbates cost-of-living pressures, especially on the most vulnerable groups"
The report compared the supply chain shock caused by the disruption of the Strait to other major events such as the Covid-19 pandemic and the Russian war in Ukraine, which had a widespread impact on the world’s poorest countries.
Since the start of military operations, traffic through The Strait of Hormuz – a vital passage through which approximately 20% of daily seaborne oil and liquefied natural gas passes – increased by 97%.
The disruption has caused oil prices to rise, with the price of Brent crude surpassing $100 a barrel before falling after President Donald Trump signaled on Monday that the war may be coming to an end.
However, energy costs and Fertilizers and transportation are on the rise, making developing economies more vulnerable to price shocks, given their high debt burdens and rising borrowing costs, according to the report.
The access to fertilizer situation could worsen for some of the poorest countries, including Sudan, Somalia, Tanzania and Mozambique, which import a large proportion of their fertilizer through the Persian Gulf. Pakistan, Sri Lanka and Kenya are also at risk, while Australia and New Zealand import about 30% of their fertilizer from the Arabian Gulf.
According to the study, nearly a third of global seaborne fertilizer trade, or about 16 million tons, passed through the Strait of Hormuz in 2024.
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