Strait of Hormuz: Another attack and a disturbing UNCTAD analysis

Image: UNCTAD

With today bringing news of an incident involving a bulk carrier 36 nautical miles north of Abu Dhabi, vessel operators are still wary of sending ships through the Strait of Hormuz. Windward AI reports that only one total crossing was recorded yesterday, leaving activity 76% below the 7-day moving average.

Putting the increasing seriousness of the situation into perspective, UN Trade and Development (UNCTAD) has released a rapid analysis – Strait of Hormuz Disruptions – Implications for Global Trade and Development – examining the implications of the disruptions and the concerns they riseabout ripple effects across energy markets, maritime transport and global supply chains.

Key findings from the UNCTAD analysis:

• Energy markets reacted immediately, with Brent crude rising above US$90 per barrel.
• Freight rates for oil tankers and war risk insurance premiums are surging, while marine fuel costs are also rising, increasing shipping costs across supply chains.
• Around one-third of global seaborne fertilizer trade (about 16 million tonnes) passes through the Strait, raising concerns about fertilizer access for some of the poorest countries.
• Developing economies may be particularly exposed, as high debt burdens and rising borrowing costs limit their ability to absorb new price shocks.
• Past crises – including COVID-19 and the war in Ukraine – showed how disruptions to energy, transport and agricultural inputs can quickly spread across interconnected markets.

Read the full UNCTAD briefing HERE