The escalating conflict in the Middle East has far — reaching economic consequences, reverberating across thousands of kilometers to strike the world’s most vulnerable economies. Somalia, Sudan, Pakistan, Ethiopia, and Myanmar have found themselves at the mercy of a financial storm that has been brewing since the outbreak of hostilities six weeks prior. Global urea prices have surged by 68 percent, Brent crude oil prices have reached 78 percent above pre-war levels, and commercial transits through the Strait of Hormuz have dropped by an astonishing 94 percent.
This economic turmoil has been labeled as one of the most significant disruptions to global energy markets in recent history by the International Monetary Fund (IMF), World Bank, and the World Food Programme (WFP). They caution that the upward spiral in food and fuel prices will disproportionately affect low-income, import-dependent economies. The ceasefire declared on April 7th has done little to alleviate the situation, as Iran has suspended tanker passage through the Strait of Hormuz and established a permission-based transit regime. Major shipping operators, including Maersk, have confirmed their reluctance to resume Gulf operations until safe passage is ensured.
The situation has taken a further turn for the worse following the collapse of peace talks in Islamabad, prompting President Trump to announce a US Navy blockade of the strait on April 12th. As long as Hormuz remains closed, the ripple effects of fertilizer, diesel, and shipping disruptions will continue to impact crisis-affected populations. The food security implications of this conflict are already evident in the current planting seasons, as the FAO Chief Economist has warned that conflict disruption beyond 40 days can lead to significant changes in farmer behavior, such as reduced fertilizer use and smaller planted areas, which will affect the 2026 and 2027 harvests.
The 40-day threshold was crossed during the ceasefire period itself, with planting seasons currently underway in Somalia, Ethiopia, and Pakistan. Despite potential declines in global oil prices, households in these five nations are expected to pay war-era prices for fuel for weeks or months to come. In Mogadishu, fuel prices skyrocketed by 150 percent within days of the war’s onset, while in Sudan, the purchasing power of humanitarian cash transfers has already decreased by 40 percent. These economic shocks are falling on populations that are already struggling to cope, exacerbating the humanitarian crisis that was well underway before the war commenced.
Source: reliefweb
Original author: Mercy Corps
