The Cost of Closing the Strait of Hormuz: Energy Bottlenecks and Global Food Security

• In March 2026, the Strait of Hormuz is closed. The shutdown blocks roughly one-fifth of the world’s oil and one-quarter of its liquefied natural gas, triggering severe welfare losses in energy-dependent developing countries worldwide.
• Standard trade models underestimate the impact because they miss the bottleneck mechanism: energy disruptions cascade through chemicals and fertilizer production into food prices, amplifying losses for the world’s poorest countries.
• Developing countries that depend on imported energy and fertilizers—particularly in South Asia, sub-Saharan Africa, and the Middle East—face the steepest food price increases and welfare losses. The aggregate global costs are moderate, but the burden falls disproportionately on the world’s poorest: the USA loses just −0.07%, while countries in South Asia and Africa face losses 10–20 times larger.
• A prolonged closure allows some market adjustment, but structural damage persists—and the timing during peak Northern hemisphere planting season compounds the food security risk.

Kiel Institute Experts