Paralysis of navigation in the Strait of Hormuz threatens 38% of oil trade and threatens comprehensive inflation
A study conducted by the United Nations Conference on Trade and Development (UNCTAD) warned that navigation disturbances across Daily ship traffic through the strait, which averaged 129 ships during the period from February 1 to 27, has almost stopped amid escalating military tensions, while the price of Brent crude oil has exceeded $100 a barrel, exacerbating concerns about inflationary pressures in multiple sectors.
The strait handles about 25% of the world’s seaborne oil trade, equivalent to about 20 million barrels per day in a year, the agency said. 2024, including 14 million barrels of crude oil and condensates and 6 million barrels of petroleum products.
The share of global trade passing through the Strait of Hormuz, based on average flows during the week preceding the military escalation that began on February 28, was 38% of Global crude oil, 29% of liquefied petroleum gas, 19% of liquefied natural gas, 19% of refined petroleum products, and 13% of chemicals, including fertilizers, making any prolonged disruption a direct threat to energy security and industrial supply chains around the world.
For regional economies, this disruption threatens to delay imports of fuel, industrial raw materials, and consumer goods, as well as higher freight rates and costs. Ship fuel and marine insurance premiums.
The UNCTAD study indicated that the impact would go far beyond the region’s borders through higher food and fertilizer prices, given the close interconnection between natural gas and fertilizer markets.
The study warned that countries that rely heavily on fertilizer shipments from the Gulf, especially low-income agricultural economies, may face reduced access to these supplies and higher import bills, increasing the risk of lower crop production and higher inflation. Food.
The report indicated that similar shocks in supply chains during the Covid-19 pandemic and the first phase of the Russian invasion of Ukraine spread rapidly across interconnected commodity markets, leading to rising food and transportation costs globally.
The report warned that this latest disruption comes at an extremely sensitive time for developing economies that already suffer from high debt service costs, limited fiscal space, and a weak ability to absorb new price shocks.
The study concluded (UNCTAD) noted that the extent of the economic repercussions will depend on the duration of the turmoil and the extent of the expansion of the tensions, but stressed that fragile economies that depend on energy, fertilizers, and imported basic foodstuffs are the most at risk.
The conference called for the protection of maritime transport, ports, and civil shipping lines in line with international law to reduce the risks that threaten global trade and development.
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