Strait of Hormuz: Gradual re-opening is no quick fix for developing nations, UN warns

By R Anil Kumar

New York/ Bengaluru, June 30, 2026. Re-opening the Strait of Hormuz would bring vital relief for many economies, but developing countries will continue to grapple with increased food and fuel costs, according to a new UN report released on Tuesday, June 30.

Following the shaky ceasefire in the US and Israeli war with Iran, commercial shipping through the strait quickly began to rebound in mid-June, but has slowed in recent days as Washington and Tehran have exchanged strikes in the region.

Iran has reportedly rejected an effort by France and Oman to remove mines from the strait and safeguard international trade as well as a suggestion by the UN’s International Maritime Organization (IMO) to open a new shipping lane off the coast of Oman.

While the report from the UN Trade and Development agency (UNCTAD) expects oil shipments to recover, it warns that freight contracts, supply chains and food systems would take longer to adjust and that high food costs could contribute to acute malnutrition in developing countries.

Vulnerable economies bear the brunt

Higher energy prices fuel higher transport costs, agricultural costs and inflation, which increases food prices long after the initial shock, UNCTAD noted.

Small island countries like Cabo Verde and Micronesia depend heavily on food and oil imports, which creates a “dual exposure” to shocks, making them especially vulnerable to price increases, UNCTAD said.

The agency estimated that 61 vulnerable economies are exposed to both oil and cereal import shocks.

Developing countries and small island States also tend to have tighter public finances and therefore less ability to absorb shocks, according to UNCTAD.

If these countries face difficulties mobilising resources, a heavy debt servicing burden, a drop in remittances or a decline in international aid, trade shocks could affect small nations even more.

Impact on food security

Beyond economic impacts, UNCTAD warned that although it is necessary to fully re-open the strait, food production risks remain.

Even short periods of unaffordable food in import-dependent countries can have lasting consequences for child wasting, meaning that a child has a low weight-for-height.

As real food prices increase by five per cent, the risk of child wasting increases by 15 per cent for poor children and 26 per cent for children of rural, landless poor households.

The report called for greater international support to help countries manage higher import costs, cushion food and fuel price shocks and strengthen their ability to cope with future trade disruptions.

“These shocks will be felt for many months, with developing countries bearing the heaviest impacts. I call on all parties to honour the ceasefire and redouble efforts,” UN Secretary-General António Guterres said.

The Strait of Hormuz is the world’s most important oil transit chokepoint

The Strait of Hormuz, located between Oman and Iran, connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. The Strait of Hormuz is the world’s most important oil chokepoint because large volumes of oil flow through the strait.

Chokepoints are narrow channels along widely used global sea routes that are critical to global energy security. The inability of oil to transit a major chokepoint, even temporarily, can create substantial supply delays and raise shipping costs, increasing world energy prices. Although most chokepoints can be circumvented by using other routes, which often add significantly to transit time, some chokepoints have no practical alternatives.

Bounded to the north by Iran and to the south by Oman and the United Arab Emirates (UAE), the corridor – only about 50km (31 miles) wide at its entrance and exit, and about 33km wide at its narrowest point – connects the Gulf with the Arabian Sea.

The strait is deep enough for the world’s biggest crude oil tankers, and is used by major Middle Eastern oil and LNG producers, as well as their customers.

The oil comes not only from Iran but other Gulf states such as Iraq, Kuwait, Qatar, Saudi Arabia and the UAE.About 20% of global LNG is also shipped through the strait, mostly from Qatar.

Hormuz is also a crucial route for exports of fertiliser from the Middle East, where natural gas is used heavily in the production process. About one-third of the world’s fertiliser trade normally passes through the strait.

The strait is also a vital channel for imports to the Middle East, including food, medicines and technological supplies.