UNCTAD Warns Hormuz Crisis Threatens Global Trade

UNCTAD warns that the Strait of Hormuz crisis is rapidly becoming a broader trade shock, as collapsing vessel traffic, rising energy prices and soaring tanker costs threaten global supply chains. The agency also cautions that disruptions to fertilizer flows could add pressure on food security, especially in import-dependent economies.

The crisis in the Strait of Hormuz is rapidly becoming more than a maritime security emergency. According to UN Trade and Development (UNCTAD), the disruption now threatens global energy flows, tanker markets, fertilizer trade and food security, raising the risk of a broader supply chain shock for import-dependent economies. The warning comes as vessel traffic through the strait has nearly collapsed, freight and fuel costs have surged, and the International Maritime Organization (IMO) has condemned attacks that killed and injured seafarers in early March.

UNCTAD describes the Strait of Hormuz as one of the world’s most critical maritime chokepoints. In the week before the conflict escalated, the passage handled 38% of global seaborne crude oil trade, 29% of liquefied petroleum gas trade, 19% of liquefied natural gas trade, 19% of refined oil products and 13% of chemical trade, including fertilizers. In 2024 alone, around 20MMb/d moved through the strait, equivalent to about 25% of global seaborne oil trade.

The agency’s clearest warning lies in the collapse of normal ship traffic. Daily transits averaged 141 vessels from Feb. 1 to Feb. 27; fell to 81 on Feb. 28, 20 on March 1; and just 10 on March 2. By March 6, transits had dropped 97% from the February average, effectively paralyzing one of the world’s most important maritime corridors.

UNCTAD warned that the disruption has immediate implications for energy security, particularly in Asia. Of the crude oil shipped through Hormuz in 2024, 84% was destined for Asian markets, while Europe accounted for 5 % and other regions for 11%. LNG trade shows a similar pattern: 83% of volumes passing through the strait went to Asia, 13% to Europe and 4 % elsewhere. In absolute terms, this represented 14.3MMb of crude oil and 294,495,205 m³/day of LNG.

Markets have already reacted. Between Feb. 27 and March 9, Brent crude rose 27% to US$91.8/b, while Dutch TTF gas prices increased 74% to €55.8/MWh. UNCTAD warned that such increases could quickly spread across transport, manufacturing and industrial supply chains, especially in developing economies with limited fiscal room to absorb another external shock.

Shipping costs are also rising sharply. Between Feb. 27 and March 6, the Baltic Dirty Tanker Index increased 54% and the Baltic Clean Tanker Index rose 72%, pushing tanker freight rates toward historic highs. At the same time, bunker fuel prices in Singapore nearly doubled, with low-sulphur fuel up 99 % and high-sulphur fuel up 100% between Feb. 27 and March 9. These increases are adding to operational pressure on carriers already facing rerouting decisions, war-risk surcharges and extreme uncertainty in the Gulf.

Insurance premiums are amplifying that pressure. UNCTAD noted that before the crisis, a war-risk premium of 0.25% on a US$100 million vessel would equal roughly US$250,000 per voyage. A 100% increase would raise that cost to US$500,000, while a 300 % increase would push it to US$1 million. For operators, this means the current shock is not limited to fuel or freight rates, but extends across the full cost structure of maritime trade.

UNCTAD also highlights a critical but less visible vulnerability: fertilizer flows. One-third of global seaborne fertilizer trade passes through the Strait of Hormuz, and in 2024 the Persian Gulf region exported 16 million t of fertilizers by sea. Urea represented 67 % of that total, followed by diammonium phosphate at 20 %, monoammonium phosphate at 9 % and other fertilizers at 4%.

For several countries, the agency says, this concentration creates major supply risks. In 2024, 54% of Sudan’s seaborne fertilizer imports came from the Persian Gulf region, along with 36% for Sri Lanka, 32% for Australia, 31% for Tanzania, 30% for Somalia, 27% for Pakistan and Thailand, 26% for Kenya and New Zealand, and 22% for Mozambique. UNCTAD warns that any prolonged disruption could undermine access to agricultural inputs, particularly in least developed and import-dependent economies.

The agency links these pressures directly to inflation and food security. Historically, higher oil prices raise food prices by increasing transport and production costs, while higher natural gas prices feed into fertilizer inflation. UNCTAD warned that the current crisis could therefore evolve into a broader cost-of-living shock, especially for vulnerable populations already exposed to debt, inflation and fragile supply chains.

Alongside the economic warning, the humanitarian toll continues to rise. Arsenio Dominguez, Secretary-General, IMO, condemned recent attacks on merchant vessels after multiple seafarers were killed and injured, calling the deaths “unacceptable and unsustainable” and stressing that civilian mariners must not become targets of conflict.