The UN Trade and Development (UNCTAD) warned Wednesday that the shutdown of the Strait of Hormuz is rapidly intensifying pressure on the global economy through energy, trade and financial channels.
It said prolonged disruptions could keep prices elevated and extend inflationary pressures.
UNCTAD said in an updated assessment of tensions in the Middle East that global conditions have deteriorated rapidly since the escalation at the end of February, with risks now spreading far beyond energy markets.
The agency said activity in the Strait of Hormuz, one of the world's most critical arteries for energy trade, has nearly ground to a halt. Daily vessel transits, which stood at around 130 in February, plunged 95% to six in March, it said.
UNCTAD said the disruption is affecting a substantial share of global oil and natural gas supplies, with immediate consequences for production, trade and consumption worldwide.
"Energy shocks have become the main channel through which the conflict is affecting trade and the global economy," it said, noting that fuel prices have jumped sharply since the Feb. 28 war began, which was initiated by the US and Israel against Iran, and remained persistently high.
"These increases are feeding through supply chains and raising the cost of producing and transporting goods worldwide," it added.
UNCTAD said oil and liquefied natural gas carriers that rely heavily on Gulf routes have been hit hardest, while container ships and dry bulk carriers are also facing rising costs and operational disruptions.
"If disruptions persist or intensify, damage to energy infrastructure could keep prices elevated for longer, prolonging inflationary pressures. Regions more dependent on Middle East energy imports, particularly South Asia and Europe, would be more exposed," it said.
The agency also warned that global trade, which started in 2026 on a strong footing, is expected to lose momentum as the year progresses. After expanding by 4.7% in 2025, global merchandise trade growth is projected to slow to between 1.5% and 2.5% in 2026, due to weakening demand and rising uncertainty.
Assuming the conflict does not escalate, global growth is expected to ease to 2.6% in 2026 from 2.9% in 2025, it said.
UNCTAD said mounting geopolitical tensions are clouding the outlook, making economic outcomes harder to predict and creating additional pressure on investment and trade, while also exposing underlying vulnerabilities such as weak growth, widening inequality and rising living costs.
"If the situation persists, disruptions to trade and financial markets could deepen, increasing the risk of a broader, cascading crisis," it warned.
The agency also said investors are increasingly moving away from riskier assets as uncertainty mounts, with sell-offs in emerging market stocks and bonds proving more severe than in advanced economies.
It added that currencies in developing countries have weakened, making essential imports such as fuel and food even more expensive.
