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Following a shaky ceasefire in the US and Israel’s war with Iran, commercial shipping through the strait quickly began to recover in mid-June, but slowed in recent days as Washington and Tehran traded attacks in the region.
Iran reportedly rejected efforts by France and Oman to remove mines from the strait and safeguard international trade as well as advice from the United Nations. International Maritime Organization (IMO) to open a new shipping lane off the coast of Oman.
Meanwhile, a report from the United Nations Trade and Development agency (UNCTAD) expects oil deliveries to recover warns that transport contracts, supply chains and food systems will take longer to adjust and that high food costs could contribute to acute malnutrition in developing countries.
Vulnerable economies bear the brunt
Higher energy prices fuel higher transport costs, agricultural costs and inflation, raising food prices long after the initial shock, UNCTAD said.
Small island nations such as Cabo Verde and Micronesia rely heavily on food and oil imports, which creates “double exposure” to shocks, making them particularly vulnerable to price increases, UNCTAD said.
The agency estimates that 61 countries are vulnerable to impacts from oil and cereal import shocks.
Developing countries and small island states also tend to have tighter public finances and are less able to absorb shocks, according to UNCTAD.
If these countries face difficulties in mobilizing resources, large debt service burdens, reduced remittances or reduced international aid, trade shocks can have a greater impact on smaller countries.
Impact on food security
In addition to the economic impact, UNCTAD warned that although reopening the strait is necessary, risks to food production still remain.
Even short periods of unaffordable food prices in import-dependent countries can have long-term consequences For child wasting, it means that the child has a low weight per height.
When real food prices increase by five percent, the risk of children becoming underweight increases by 15 percent for poor children and 26 percent for children from poor rural and landless households.
The report calls for greater international support to help countries manage higher import costs, cushion food and fuel price shocks, and strengthen their ability to weather future trade disruptions.
“This shock will be felt for months, and developing countries will bear the brunt of the impact. I call on all parties to respect the ceasefire and redouble efforts,” the UN said. Secretary General Antonio Guterres said.
