The Strait of Hormuz is open again, and oil prices have cooled. But the United Nations Conference on Trade and Development (UNCTAD) warns that the impact on shipping and food costs may linger for dozens of vulnerable economies, even as headline crude prices stabilize.
What's the Latest?
UNCTAD, a UN trade and development agency, cautioned that energy prices can normalize faster than supply chains. Even though tankers can now move through the Strait of Hormuz—a critical chokepoint for global oil and gas—shipping networks don't instantly reset. Freight contracts and surcharges can stick around, meaning calmer crude prices don't guarantee cheaper groceries.
Higher fuel and fertilizer costs can keep feeding into farm production and transport with a delay. Fertilizer bought at elevated prices still affects the next planting and harvest cycle, and food import orders are often priced weeks or months in advance. UNCTAD identified 61 vulnerable economies that are especially exposed to oil and cereal import shocks. For places that rely heavily on imported fuel or staple foods, a stretched import bill can widen trade deficits, pressure currencies, and keep inflation uncomfortably high even when headline oil looks back to normal.
Why Does This Matter for Investors?
Brent crude sliding back toward $73 a barrel eases one part of the shock, but it doesn't erase the lagged costs embedded in delivered food. When freight and fertilizer stay expensive, import-dependent countries can keep paying more for the same cargoes, while export revenues often don't rise fast enough to offset it. That mismatch usually shows up in the balance of payments: more dollars going out than coming in.
For investors watching frontier-market bonds and currencies, that can translate into renewed pressure on exchange rates, higher inflation, and, in the most exposed countries UNCTAD flagged, a higher risk that governments struggle to meet external obligations. This dynamic is particularly relevant for markets in Africa and other regions that rely on imported food and fuel. As African markets have shown resilience to dollar strength, the lingering food cost pressures could test that resilience.
Broader Economic Context
The situation highlights how supply chain disruptions can have lasting effects beyond the initial shock. Even as geopolitical tensions ease and oil flows resume, the costs of shipping and inputs like fertilizer remain elevated. This is a reminder that inflation in food and other essential goods can be sticky, especially for economies that lack domestic production capacity.
For everyday investors, this means that while headline inflation numbers may moderate in developed economies, the pain could persist in emerging and frontier markets. Companies with exposure to these regions—through supply chains or sales—may face continued cost pressures. On the other hand, firms that produce or transport food and fertilizer could see sustained demand.
The UNCTAD warning also underscores the importance of monitoring freight rates and fertilizer prices as leading indicators for food inflation. Investors in agricultural commodities or shipping stocks may find opportunities, but the broader message is caution: the recovery from supply shocks is rarely linear.
What to Watch Next
Investors should keep an eye on trade data from vulnerable economies, as well as central bank actions in those countries. If import bills remain high, some governments may need to raise interest rates to defend their currencies, which could slow growth further. Currency moves in emerging markets, such as the recent Bolivian boliviano devaluation, could become more common.
Meanwhile, the energy market's reaction to the Strait of Hormuz reopening will be closely watched. While oil prices have eased, any renewed tensions could quickly reverse that trend. For now, the focus shifts from the immediate crisis to the longer-term fallout for the world's most vulnerable economies.
