BAKU – The United Nations has warned of significant risks to global trade and development, including higher food prices and cost-of-living, if the Strait of Hormuz is closed amid the West Asia conflict, according to The Economic Times.

The UN Conference on Trade and Development (UNCTAD) said in a report Tuesday that the ongoing military escalation in the region due to the US-Israeli strikes on Iran, and retaliation by Tehran has disrupted shipping flows through the Strait of Hormuz, one of the world's most critical maritime chokepoints.

The narrow passage carries around a quarter of global seaborne oil trade and significant volumes of liquefied natural gas and fertilizers.

"The resulting ripple effects go far beyond the region, affecting energy markets, maritime transport, and global supply chains," the report said.

"Higher energy, fertiliser and transport costs - including freight rates, bunker fuel prices and insurance premiums - may increase food costs and intensify cost-of-living pressures, particularly for the most vulnerable," it said.

The UNCTAD report stressed that disruptions in the Strait of Hormuz underscore the "vulnerability" of critical maritime chokepoints to geopolitical tensions and their potential to transmit shocks across supply chains and commodity markets.

It further noted that reducing risks to global trade and development, including environmental risks, requires de-escalation and safeguarding maritime transport, ports and seafarers, and other civilian infrastructure, while maintaining secure trade corridors in line with international law and freedom of navigation.

"Economic impacts, both globally and for the region, will depend on the duration, intensity, and geographic scope of the tensions. Continued monitoring is essential to assess evolving risks and their potential impacts," UNCTAD said.

The report noted that many developing countries already face high debt service burdens, limited fiscal space, and constrained access to finance.

In such a context, rising energy, transport, and food costs could strain public finances and household budgets, potentially heightening economic and social pressures and complicating progress toward sustainable development, particularly in economies heavily dependent on imported energy, fertilizers, and staple foods.

According to UNCTAD data, about 20 million barrels of oil per day (bpd)- roughly 25 percent of global seaborne oil trade - passed through the Strait of Hormuz in 2024. Of them, crude oil and condensate accounted for 14 million bpd and petroleum products for six million bpd.

Data from a week before the latest West Asia escalation showed that 38 percent of global seaborne crude oil trade, 29 percent of liquefied petroleum gas trade, and 19 percent each of liquefied natural gas and refined oil products passed through the Strait.

Since Feb. 28, when the first strikes against Iran were launched by the US and Israel, ship traffic through the Strait of Hormuz has dropped by 97 per cent.

UNCTAD warned that disruptions in the Strait compromise energy supplies, particularly to Asia. (AZERTAC)