Business EconomyPosted at: Jun 3 2026 2:52PM


Hormuz disruption can impact nearly one billion people living in vulnerable economies: UNCTAD

By Sourav Shekhar
New Delhi, Jun 3 (UNI) Disruptions in the Strait of Hormuz are sending shockwaves through the global energy system and may affect about one billion people living in vulnerable economies, said a United Nations Conference on Trade and Development (UNCTAD) report released here on Wednesday.
Vulnerable economies refer to nations or regions highly susceptible to external shocks such as natural disasters, fluctuating commodity prices and global market shifts which can severely disrupt their development.
The report noted that out of seventy-five economies, the least developed countries (LDCs) and small island developing countries (SIDS)-65 depend on imported oil.
For these nations, rising energy prices will translate into higher costs and difficult trade-offs and will effect about 1 billion lives.
“Without relief these shocks will further entrench structural vulnerabilities,” the report warned.
UNCTAD noted that prices of oil and refined oil products have risen sharply. Sharing a pictorial representation, it showed the rising cost of crude and gasoline by 40 percent and 50 percent, respectively.
The report estimates that a 50 per cent increase in oil prices would raise the annual oil import bill of vulnerable economies by approximately 20.4 billion dollars.
Least developed countries alone would bear an additional burden of USD 16.1 billion , while small island developing states would face an extra cost of USD 4.3 billion.
The impact is expected to be particularly severe because these economies largely import refined petroleum products such as petrol and diesel rather than crude oil.
Nearly 98 per cent of their oil imports consist of refined products, leaving them directly exposed to fluctuations in international fuel prices.
Several countries could face especially heavy financial strain. Among the least developed countries, Mauritania could see its oil import costs rise by an amount equivalent to 7.3 per cent of its GDP, followed by Gambia, Burkina Faso, Liberia and Zambia.
In the category of small island developing states, Vanuatu, Maldives, Tonga and Mauritius are among the countries expected to experience the highest economic impact.
The report also points out that a number of countries depend heavily on oil supplies originating from the Hormuz region. Seychelles sources almost all of its oil imports from countries around the Strait of Hormuz, while Uganda, Mauritius, Tanzania, Zambia and the Maldives also rely significantly on the region. Any prolonged disruption could therefore force them to seek alternative suppliers at higher costs.
UNCTAD warned that the consequences of rising oil prices would extend well beyond the energy sector.
Higher fuel costs are likely to increase freight charges and transportation expenses, pushing up the prices of food and other essential goods. This could trigger broader inflationary pressures, reduce household purchasing power, and increase the cost of living.
Governments may also face difficult choices between protecting consumers from rising fuel prices and maintaining spending on critical sectors such as healthcare, education and infrastructure.
At the same time, higher import bills could widen trade deficits, weaken currencies, raise borrowing costs and slow economic growth.
The report cautions that without adequate support and stable energy markets, the latest oil price shock could deepen existing vulnerabilities and undermine development gains achieved by many low-income nations over the past decade.
Summing up the gravity of the situation, UN Secretary-General António Guterres said that when the Strait of Hormuz is choked, the world's poorest and most vulnerable nations struggle the most, as they have the least capacity to absorb the impact of soaring energy costs. UNI SAS AAB
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