The United Nations Conference on Trade and Development (UNCTAD) has warned that vulnerable economies continue to face significant risks from elevated food and fuel costs despite the reopening of the Strait of Hormuz, which has brought immediate relief to global energy markets.
In a report released on Tuesday, the UN agency said that while oil prices have retreated following the reopening of the strategic waterway, food and transport systems are expected to take considerably longer to recover as disrupted supply chains gradually return to normal.
The Strait of Hormuz, through which around one-fifth of the world’s oil and gas supplies normally pass, was effectively paralysed for more than 100 days during a conflict sparked by joint United States and Israeli strikes on Iran in late February.
Following an interim agreement between the United States and Iran, Brent crude prices have fallen sharply to around 73 dollars per barrel, close to pre-conflict levels. However, UNCTAD cautioned that the effects of higher fuel, natural gas and fertiliser costs are likely to persist, continuing to affect agricultural production, transport expenses and household budgets.
According to the agency, developing and vulnerable economies remain particularly exposed to fluctuations in oil and fertiliser prices, while sustained increases in food prices could deepen hardship for low-income households. It noted that even a five per cent rise in food prices can significantly increase the risk of childhood wasting.
UNCTAD identified 61 vulnerable economies that remain exposed to oil and cereal import shocks linked to the Strait of Hormuz disruption.
Among them is Cape Verde, which depends heavily on imported fuel and has experienced rising electricity, transport and food costs that may continue even as global energy markets stabilise.
The agency also highlighted staple food-importing countries such as Yemen, warning that their fragile economies are poorly equipped to absorb higher grain prices and increased transport costs.
UNCTAD called for greater international support to help the most exposed countries recover from the economic shocks caused by the prolonged disruption, stressing the need to strengthen resilience against future supply chain and commodity price crises.
