Dubai, UAE — The ongoing US-Israeli war on Iran has disrupted shipping flows through the Strait of Hormuz, and the resulting ripple effects go far beyond the region, affecting energy markets, maritime transport and global supply chains, according to a report by the United Nations Conference on Trade and Development (UNCTAD).
The Strait of Hormuz remains one of the world’s most critical maritime chokepoints, carrying roughly a quarter of global seaborne oil trade along with large volumes of liquefied natural gas and fertilizers.
A critical maritime chokepoint for global trade
Based on shipping flows during the week preceding the military escalation that began on February 28, crude oil accounted for about 38 percent of trade moving through the strait. Liquefied petroleum gas represented 29 percent, while liquefied natural gas and refined oil products each accounted for around 19 percent.
Chemicals, including fertilizers, represented 13 percent of trade through the passage. Container traffic accounted for 2.8 percent, while dry bulk cargo such as grains made up about 2.4 percent.
In 2024, approximately 20 million barrels per day of oil were transported through the strait, equivalent to about 25 percent of global seaborne oil trade. Crude oil and condensate accounted for roughly 14 million barrels per day, while petroleum products made up about 6 million barrels per day.
Ship traffic through the strait drops sharply
According to UNCTAD data based on Clarksons Research Shipping Intelligence Network, ship traffic through the Strait of Hormuz has fallen sharply since the escalation in the region.
Daily vessel transits averaged 129 ships between February 1 and February 27. However, traffic dropped significantly after the escalation, falling to as few as three vessels on some days.
The disruption reflects the impact of regional tensions on shipping flows through the narrow passage, which connects the Persian Gulf with the Gulf of Oman and the Arabian Sea.
Energy markets react to supply concerns
Energy markets reacted quickly to the disruption in shipping through the Strait of Hormuz.
UNCTAD data shows Brent crude oil prices rising above $90 per barrel, while natural gas prices also increased sharply.
Between February 27 and March 9, oil prices rose 27 percent to $91.8 per barrel, while gas prices climbed 74 percent to €55.8 per megawatt hour.
The price movements highlight the sensitivity of global energy markets to disruptions affecting the strait, a key transit route for energy supplies.
Rising energy costs linked to food price pressures
UNCTAD notes that increases in oil and gas prices can have wider economic effects through higher transport, fertilizer and food costs.
Higher energy prices can increase maritime freight rates, bunker fuel prices and insurance premiums, raising the cost of transporting goods globally.
Historical data compiled by UNCTAD shows that periods of rising oil prices have often coincided with increases in global food prices.
Similarly, increases in natural gas prices are closely linked to higher prices for nitrogen-based fertilizers such as urea and diammonium phosphate.
Fertilizer supplies to vulnerable countries at risk
Disruptions in the Strait of Hormuz could also affect fertilizer supplies for some countries that depend on imports from the Persian Gulf region.
According to UNCTAD data, several countries rely heavily on fertilizers originating from Gulf exporters and transported by sea.
In 2024, fertilizers from the region accounted for 54 percent of Sudan’s maritime fertilizer imports, 36 percent for Sri Lanka and 32 percent for Australia.
Other countries with significant dependence include Tanzania at 31 percent, Somalia at 30 percent, Pakistan and Thailand at 27 percent each, and Kenya and New Zealand at 26 percent.
Most fertilizer shipped from the Gulf region consists of urea, which accounts for about 67 percent of exports transported by sea. Diammonium phosphate represents about 20 percent, followed by ammonium dihydrogen phosphate at around 9 percent.
Financial pressures on developing economies
UNCTAD said the disruption comes at a time when many developing economies are already facing financial pressures.
Data shows government bond yields rising in several countries following the escalation on February 27.
Between January 1 and March 9, yields on Iraqi bonds rose to about 7.1 percent, while Bahrain’s reached 7.0 percent. Jordan’s yields rose to around 6.4 percent, and Oman’s to approximately 5.3 percent.
Bond yields also increased in Saudi Arabia, Qatar, the United Arab Emirates and Kuwait during the same period.
Higher borrowing costs could add to economic pressures for countries already facing debt servicing challenges.
Wider implications for trade and development
UNCTAD said disruptions in the Strait of Hormuz illustrate the vulnerability of critical maritime chokepoints to geopolitical tensions.
The organization noted that shocks affecting energy supplies, transport and agricultural inputs can spread quickly through interconnected global markets.
Similar ripple effects were observed during earlier global disruptions, including the COVID-19 pandemic and the early stages of the war in Ukraine.
UNCTAD said the overall economic impact will depend on the duration and scale of the disruption but emphasized the need for continued monitoring of potential effects on global trade and vulnerable economies.
The report also highlighted the importance of safeguarding maritime transport, ports and seafarers, maintaining secure trade corridors and ensuring freedom of navigation in accordance with international law.