Global body UN Trade and Development (Unctad) says the “virtual closure” of the Strait of Hormuz, in the Middle East, is disrupting a critical share of global oil and gas flows, while trade is losing momentum.

The Strait of Hormuz, a central artery for global energy trade, has seen activity fall to a near halt and ship transits dropped from about 130 a day in February to six in March – a collapse of about 95%.

Unctad warns that global merchandise trade growth is likely to slow sharply from about 4.7% in 2025 to between 1.5% and 2.5% this year.

In an update to Unctad’s initial assessment on March 10, the body states that there has been a rapid worsening of global conditions since the US and Israel started military attacks against Iran at the end of February.

Risks now extend well beyond energy markets, with Unctad noting that the effects of the conflict are spreading through the global economy, disrupting energy flows, raising prices and increasing financial pressure on developing countries.

The disruption is hitting a large share of global oil and gas supplies, with immediate consequences for production, trade and consumption worldwide and also spilling over into transport systems, including martime routes, air cargo and port logistics.

Energy shocks are pushing up prices and increasing the cost of living and investors are pulling back from developing countries, thereby weakening currencies and raising borrowing costs.

This disruption exposes countries to high vulnerability.