LONDON : The United Nations Conference on Trade and Development (UNCTAD) cautioned that the ongoing military escalation following US-Israeli strikes on Iran and Tehran’s retaliation has already disrupted shipping flows through the Strait of Hormuz, one of the world’s most critical maritime chokepoints.

The narrow waterway carries around a quarter of global seaborne oil trade along with significant volumes of liquefied natural gas and fertilisers, making it vital for global energy supplies and trade routes.

According to UNCTAD, the ripple effects of disruptions in the Strait extend far beyond the region. Higher energy prices, increased freight costs, rising bunker fuel prices and higher insurance premiums could drive up the cost of transporting goods, eventually leading to higher food prices and stronger cost-of-living pressures across many countries.

Stephane Dujarric, spokesman for UN Secretary-General Antonio Guterres, said during a daily press briefing that the UNCTAD economic analysis highlights “significant risks to global trade and development” if the Strait faces prolonged disruption.

The report also emphasised that geopolitical tensions around key maritime chokepoints expose the vulnerability of global supply chains and commodity markets. It called for the de-escalation of tensions and the safeguarding of maritime transport, ports, and seafarers, while ensuring secure trade corridors in line with international law and freedom of navigation.

UNCTAD noted that the scale of economic impact will depend on how long the tensions persist and how widely the conflict spreads. Continued monitoring, the report said, is essential to assess evolving risks to global markets and supply chains.

Data from UNCTAD shows that about 20 million barrels of oil per day, roughly 25 per cent of global seaborne oil trade, passed through the Strait of Hormuz in 2024. Of this, crude oil and condensate accounted for 14 million barrels per day, while petroleum products made up about six million barrels.

Before the latest escalation in West Asia, the Strait handled 38 per cent of global seaborne crude oil trade, 29 per cent of liquefied petroleum gas trade and 19 per cent each of liquefied natural gas and refined oil product shipments.

However, since February 28, when the first strikes against Iran were launched by the United States and Israel, ship traffic through the Strait of Hormuz has dropped by as much as 97 per cent, according to the report.

UNCTAD warned that Asia could be hit hardest by disruptions in the Strait. In 2024, around 84 per cent of the 14.3 million barrels of crude oil transported daily through the waterway were destined for Asian markets, while only 16 per cent went to Europe and other regions.

Similarly, about 83 per cent of the 10.4 billion cubic feet of liquefied natural gas shipped daily through the Strait was also bound for Asia. The route is equally crucial for fertiliser trade, with nearly one-third of global seaborne fertiliser shipments, roughly 16 million tonnes annually, passing through the Strait.

The UN agency warned that rising energy prices often translate into higher food prices because gas is a key input for fertiliser production and fuel costs affect the transportation of food supplies.

The report also highlighted that many developing countries are already facing high debt burdens, limited fiscal space and restricted access to finance. In such conditions, rising energy, food, and transportation costs could place further strain on public finances and household budgets, potentially slowing progress towards sustainable development goals.