ADDIS-ABABA, July 1 –The United Nations Conference on Trade and Development (UNCTAD) says the reopening of the Strait of Hormuz may ease pressure on global energy markets, but many vulnerable economies could continue to face higher food and fuel costs in the months ahead.
In a new report, the agency said supply chains disrupted during more than 100 days of shipping delays through the strategic waterway will take longer to recover than oil markets. As a result, transport, food and other essential goods may remain expensive even as crude oil prices stabilise.
The Strait of Hormuz, which carries about one fifth of the world’s oil and gas supplies, was heavily disrupted during the conflict that followed joint US and Israeli strikes on Iran in late February.
Although Brent crude has dropped to around $73 per barrel, close to where it traded before the conflict, UNCTAD said higher fuel, gas and fertiliser costs are still expected to affect farming, transport and household spending.
The agency warned that countries that depend heavily on imported fuel, fertiliser and food remain the most exposed, identifying 61 vulnerable economies at risk from higher oil and grain prices linked to the disruption.
Among them is Cape Verde, where rising fuel costs have pushed up electricity, transport and food prices. Yemen was also highlighted because of its heavy reliance on imported staple foods and its limited ability to absorb higher grain and shipping costs.
UNCTAD added that sustained increases in food prices could have serious social consequences. According to the agency, a 5% rise in food prices can significantly increase the risk of childhood wasting in vulnerable countries.
The agency called for international support to help the economies most affected recover from the recent disruption and reduce the impact on households.
