To better understand the implications of this disruption and the conclusions of the report published on March 10, UN News spoke with Frida Youssef, Head of the UN Trade and Development Economic Affairs Section (UNCTAD).
Global consequences
Ms. Youssef explained that traffic in the Strait where the Persian Gulf narrows has fell from around 130 ships per day before the crisis to single digits in early March, a decline of more than 95 percent.
Today, the Strait is not formally closed, but severely restricted, amid multiple Iranian attacks on shipping since the war broke out that have spooked global energy markets and driven up prices.
Contagion effects beyond Hormuz
“The disruption is no longer limited to the Strait of Hormuz; It is spreading through regional shipping routes and affecting critical supply lines.”explained Ms. Youssef.
The knock-on effects of this disruption are being felt across the Red Sea and beyond, with ships diverted, voyages extended and costs rising. This is adding pressure to global trade and humanitarian agencies, which face slower, more expensive and less predictable aid shipments.
Impact on economies and citizens
While the immediate consequences of the Strait of Hormuz crisis have meant higher energy costs, more expensive transportation, rising food prices and delays in supply chains, the decline in regional fertilizer exports also threatens to have extremely serious consequences.
UNCTAD highlights the rising production costs of fertilizers, particularly nitrogen-based fertilizers, which are heavily dependent on gas from the Gulf States.
This is already putting pressure on agricultural production and productivity, with likely consequences for global food prices. “Timing is key,” says UNCTAD’s Ms. Youssef.
less able to cope
“It is now the spring planting season, when countries and farmers usually buy fertilizers for the next harvest. If they cannot ensure sufficient supply – or if prices are too high – crop yields could decline.”
The least developed economies in the world have “the less ability to absorb impacts (and) are the ones who will feel the effects most strongly”he continues.
For them, higher fuel, food, fertilizer and transportation costs could quickly translate into pressure on public finances and household budgets. This can reduce food production and increase food insecurity, especially where import dependency is high.
How the UN can help
Despite all these challenges, “There is a shared global interest in keeping trade routes open, because disruptions of this scale affect all economies.“insists Ms Youssef. UNCTAD is closely monitoring developments and providing data and analysis to support governments, she explains.
The UN agency also helps Bring together national governments and partners to share information and coordinate their actions.while highlighting the importance of keeping maritime transport safe and predictable, in line with international law.