Climate & resilience
Oil Price Surge After Strait of Hormuz Closure Hits Developing Nations Hardest
Global oil prices jumped after the Strait of Hormuz shut, pushing diesel and gasoline up by dozens of percent in many low‑income countries and straining food affordability and fiscal stability.
American Impact Alliance News Desk2 minute read
Geopolitical trigger and global price surge
When conflict forced the closure of the Strait of Hormuz in February, the route that moves roughly one‑fifth of the world’s oil supply, Brent crude climbed from about $70 a barrel in January to more than $120 by March. The spike eased briefly as diplomatic talks progressed, but resumed when negotiations collapsed, leaving futures markets projecting elevated prices through the end of the year. Higher oil prices translate directly into higher fuel costs for households and businesses worldwide, setting the stage for broader economic pressure.
Unequal impact on developing economies
Developing nations have felt the brunt of the shock. Nigeria’s diesel price surged about 83 % between late February and the end of August, while Ireland’s diesel rose about 9 % in the same period. In the gasoline market, Myanmar saw about 51 % increase compared with a modest 3 % rise in Sweden. Local tax structures, subsidies, pricing rules and exchange‑rate fluctuations amplify these differences. Countries that rely heavily on imported fuel, such as Cabo Verde—where net fuel imports consumed a quarter of GDP in 2023—and Lebanon—where they accounted for nearly a fifth—now face tighter budgets, limiting their ability to shield households from rising food, medicine and other essential costs.
Renewable alternatives and policy options
The UNCTAD report urges diversification of energy supplies and greater investment in affordable renewables. Wind and solar power are not vulnerable to geopolitical disruptions and, in more than 90 % of cases, are cheaper than the cheapest new fossil‑fuel projects. Expanding renewable capacity could lower exposure to future oil price spikes, reduce transport costs that feed into food prices, and free fiscal space for social protection. Policymakers in affected countries are therefore encouraged to redesign subsidy regimes and accelerate clean‑energy projects to build resilience against similar shocks.