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António Guterres criticized restrictions on free travel through tipping points that “impede shipments of oil, gas, fertilizer and other critical commodities” and “strangle the global economy.”
Setting out three possible trajectories, he said that even if shipping and trade restrictions are lifted soon, “supply chains will take months to recover,” with global growth falling from 3.4 to 3.1 percent, inflation rising to 4.4 percent and trade slowing sharply.
“And a world still reeling from the shock of the pandemic and the war in Ukraine will experience further economic pressure. This is the best scenario,he said.
UN problem solving
Guterres highlighted ongoing diplomatic efforts by the head of the UN Projects Service (UNOPS) leading the UN Task Force in the strait to provide a possible humanitarian corridor.
The head of the UN’s maritime organization, the IMO, is also developing a framework for evacuating ships and sailors if safe passage can be guaranteed.
The consequences are devastating
If If disruptions arising from Iranian attacks and threats as well as the US blockade of Iranian ports continue until the middle of the year, the impact will be even more severecontinued Mr. Guterres, reporting to journalists in New York.
“Thirty-two million people were pushed into poverty; fertilizer was running out and crop yields were declining; 45 million people were facing extreme hunger; and hard-won development progress was being reversed in an instant.”
In a In a worst-case scenario, where severe disruption persists until the end of the year, “we face the specter of a global recession – with dramatic impacts on society, the economy, and political and social stability,” he warned.
Open the Straits now
“These consequences are not cumulative, but rather exponential,” Guterres stressed, warning that “the longer this vital artery is blocked, the more difficult it is to reverse the damage done.”
“My message to all parties is clear: The right and freedom of navigation must be restored immediately… Open the Straits. Let all ships pass. Let the global economy breathe again.”
People queue with empty gas cylinders for cooking in Kathmandu, Nepal. (submit)
The economic shock spreads
Against this backdrop, economic shocks are already being felt in global energy markets.
With no sign of an end to the dispute over shipping in the Strait of Hormuz and with the price of Brent crude hovering around $118 in trading on Thursday, the prospect of running out of fuel, gas and other fuels has focused attention among the world’s major powers on finding a solution quickly.
Southeast Asia and South Asia are the first regions to be hit by the most severe energy crisis in a generation, said Dario Liguti of the UN Economic Commission for Europe (ECE), but he warned that “this is an ongoing energy crisis,” with drivers in Europe already prepared every time they fill up the tank.
Considering that national economies around the world are still very dependent on fossil fuels and regional or geopolitical shocks, ECE is also experiencing this unite countries in Geneva and elsewhere to discuss ways to reduce the use of fossil fuels, or at least use them more wisely.
The closure of the Strait of Hormuz caused oil and plastic prices to soar.
Stop wasting fuel
One wasted resource that could be utilized more widely is natural gas – methane – which is usually burnedor “burned” at oil wells, processing plants or fossil fuel refineries, as a safety measure.
Rather than burning the gas – as is often the case at refineries around the world – the gas can be stored and used when neededreducing our dependence on primary energy sources, according to UNECE.
The agency is already leading efforts to do just that reduce methane emissions which is 80 times more powerful than CO₂ over a 20 year period and is a clear cause of global warming.
The clean energy transition is critical
In line with the sustainability goals agreed by countries around the world in 2015, the UN supports the transition towards renewable energy production, away from fossil fuels.
That the current crisis “is a clear signal that we need to make an energy transition in particular through the electrification of transport or heating,” Mr. Liguti stressed.
“We need to accelerate the adoption of renewable energy because it is a decentralized energy source and much cleaner, not only from an environmental point of view, but also from an energy security point of view.”
