The reopening of the Strait of Hormuz after more than 100 days of shipping disruption brings relief to global energy and trade flows, but the world's most vulnerable economies face a longer, costlier, and more uneven path to recovery, according to a new report by the UN Conference on Trade and Development (UNCTAD).
Disruption and Recovery Timeline
The report, titled "Strait of Hormuz Disruptions: Beyond Reopening — Lasting Impacts on Vulnerable Economies," confirms that daily ship transits through the strait ran at a steady average during the first two months of 2026 but collapsed after the US-Israeli war with Iran began on February 28. Shipping began to recover when a ceasefire agreement between Washington and Tehran, which included the reopening of the waterway, was announced in mid-June.
Energy Markets Calm, but Other Sectors Lag
UNCTAD noted that even the prospect of the reopening had already begun to calm crude oil markets, with benchmark prices across Europe, North America, the Middle East, and Russia easing from their high points during the escalation. However, the agency cautioned that downward adjustments were slower in other sectors. Grain and oilseed freight costs remained well above pre-escalation levels, even after the strait reopened.
Chain Reaction Across the Global Economy
The report warned that the disruption to maritime traffic through this critical corridor for oil, gas, and fertilizer shipments set off a chain reaction across the global economy. Resultant higher energy prices caused transport costs to rise and fueled broader inflation, driving up agricultural production costs, squeezing food production, and pushing domestic food prices higher. Vulnerable populations now face greater food insecurity as a result.
Disproportionate Impact on Poorest Nations
Of all the countries analyzed, UNCTAD identified least-developed nations and small island developing states as being disproportionately exposed. The data revealed that dozens faced dual exposure as net importers of both oil and cereal products. Small island developing states are particularly reliant on oil imports, which consumed as much as a quarter of their gross domestic product (GDP) in some cases. Among least-developed countries, cereal imports weigh heavily on national accounts, with Yemen, Kiribati, and Lesotho topping the list of countries where net cereal imports consumed the largest share of GDP.
Limited Capacity to Absorb Shocks
The agency stated that these economies are the least equipped to absorb such shocks. Tight public finances, difficulty mobilizing domestic and external resources, heavy debt-servicing burdens, exchange-rate risks tied to high external debt, declining remittances, and reductions in international aid all narrow their capacity to cushion price shocks.
Persistent Inflation and Child Malnutrition
UNCTAD said the effects of energy-price shocks on inflation have grown more persistent since the COVID-19 pandemic. A 1 percent change in energy prices now has a larger and longer-lasting cumulative effect on consumer prices than it did in the pre-pandemic era. The agency also highlighted a broader pattern: food-price inflation in developing countries continued to climb even after the shocks driving increases in oil and grain prices had eased—a dynamic observed again when the US-Iran conflict began in February.
The human cost of even short-term spikes in food prices can be long-lasting. The report cited a study of 1.27 million preschool children in 44 developing countries that found a 5 percent real-terms increase in food prices was associated with an 11 percent rise in the risk of child wasting—a measure of acute malnutrition linked to early childhood mortality—among children under five. This risk increased to 15 percent for children under one year old, 26 percent for poor children, and 9 percent among children in rural, landless, poor households.
Time Needed for Normalization
The agency said normalization of trade will take time, since international energy prices adjust quickly but shipping routes and value chains take longer to recalibrate. It warned that food-production risks remain elevated, with price hikes compounding concerns from what is expected to be a strong El Nino weather pattern this year.
Calls for International Support
UNCTAD called for increased international support for affected countries, warning that declining development assistance combined with mounting debt-servicing burdens threatens to slow recovery in the most-exposed economies. It urged investment in resilience measures, including diversification of trade sources, tailored to the specific financial constraints nations face.
UN Secretary-General Antonio Guterres, quoted in the report, said the shocks stemming from the most recent disruptions "will be felt for many months, with developing countries bearing the heaviest impacts." He called on all parties to honor the ceasefire agreement and redouble their efforts to sustain it.
