Choking the lifeline: How Strait of Hormuz disruptions threaten the world’s vulnerable economies
Orisemeke Benjamin
Disruptions in the Strait of Hormuz are sending shockwaves through the global energy system, putting the world’s most fragile nations on the frontline of an impending economic crisis. For least developed countries (LDCs) and small island developing States (SIDS), a spike in oil prices is not just a statistical fluctuation—it is a direct threat to survival. Out of 75 of these vulnerable nations, an overwhelming 65 depend heavily on imported oil.
A sudden price surge risks devastating nearly 1 billion lives.
According to data from a new UN Trade and Development (UNCTAD) report titled: “Strait of Hormuz
Disruptions: The burden of oil price shocks on vulnerable economies”, 983 million people live in these exposed economies, where more than 30% already subsist below the extreme poverty line of $3 per day. Because these nations predominantly import refined oil products—which constituted 97.8% of their net oil imports in 2024—they are immediately defenseless against global market volatility.
The financial toll of a prolonged disruption is staggering. UNCTAD estimates that a 50% increase in oil prices could raise the collective cost of importing oil by a crushing $20 billion yearly. For numerous LDCs and SIDS, this shock translates into an import bill increase exceeding 0.5% of their total GDP.
The domestic fallout from these numbers will be swift and severe. Higher oil prices instantly inflate freight and fuel costs, driving up the overall cost of basic goods. Because these economies rely so heavily on fuel imports, price hikes quickly mutate into broader inflation, drastically raising the daily cost of living. This triggers intense fiscal pressure on governments, forcing them into brutal trade-offs between shielding impoverished households from price spikes and sustaining essential public services or long-term sustainable development investments. The resulting economic slowdown—characterized by widened current account deficits, weakened exchange rates, and tighter credit conditions—threatens to permanently entrench structural vulnerabilities.
The crisis underscores a stark reality: geopolitical bottlenecks thousands of miles away dictate the quality of life for the global poor. Highlighting the human stakes of this economic chokehold, United Nations Secretary-General António Guterres issued a sobering warning to the international community:
“When the Strait of Hormuz is strangled, the world’s poorest and most vulnerable cannot breathe.”
Without immediate global relief and strategic intervention to secure alternative supplies, these energy shocks will dismantle years of developmental progress, leaving a billion people to pay the ultimate price for global instability.
