In a policy brief titled The Cost of Closing the Strait of Hormuz: Energy Bottlenecks and Global Food Security, authors- Julian Hinz, Hendrik Mahlkow, Robin Sogalla, and Gerald Willmann examine the global effects of a March 2026 closure of the Strait of Hormuz. The Strait is a critical chokepoint through which “approximately 21% of global petroleum consumption and around 25% of the world’s liquefied natural gas (LNG)” flows daily. The authors argue that most discussions focus only on oil and gas, but the real impact is much wider because many industries depend on energy as a basic input.
The report uses detailed trade data and sector-level evidence to show how much the world depends on Gulf countries. It highlights that these countries supply not only energy, but also key products used in farming and industry. For example, they export large shares of “hydrocarbon derivatives (73.4%) … urea fertilizer (14.2%).” These are essential for food production. The report also shows that this dependence has grown over time and is difficult to replace quickly. As the authors state, “the world has become more dependent on Gulf suppliers over time, not less.” Shipping data shows that tanker traffic falls to near zero during the closure, demonstrating how quickly disruption spreads.
The main argument of the report is the idea of a “bottleneck mechanism.” The authors explain that “standard trade models underestimate the impact because they miss the bottleneck mechanism.” In simple terms, some inputs cannot be easily replaced. Natural gas is one such input because it is needed to make fertilizer. When gas supply is disrupted, fertilizer production falls. This then raises the cost of farming and food. The report describes this chain clearly: “Energy disruption… Chemical bottleneck… Food price transmission”. This means an energy shock turns into a food crisis.
The authors use a global economic model to measure these effects. The results show that prices rise across sectors. In the short run, oil prices increase by about +11.94% and food prices by +2.75%. The overall global impact looks moderate, but the burden is uneven. As the report states, “the USA loses just −0.07%, while countries in South Asia and Africa face losses 10–20 times larger”. This shows that poorer, energy-dependent countries are hit much harder. Even when markets adjust over time, the report finds that “structural damage persists.”
A key finding is that developing countries face a double problem. They pay more for energy and also more for food. The report explains that “energy-importing developing countries face disproportionate losses… it is not merely an energy crisis—it is a food security crisis”. This is especially serious because many of these countries depend on imported fertilizer. The timing also matters. The closure happens during the planting season, so delays in fertilizer supply reduce crop output for the whole year.
The report shows that India is also strongly affected. In the short run, India’s welfare falls by about −1.78%, which is much higher than advanced economies like the United States. India also faces rising food prices because it depends on imported energy and fertilizers. This means the impact is not only on fuel costs but also on agriculture and household food expenses. The report places India among the more vulnerable large economies.
The report argues that this kind of crisis cannot be treated as only an energy issue. It states that “policymakers who treat these as separate risks will underestimate each one”. The authors suggest practical steps. Countries should build fertilizer reserves, similar to oil reserves. They should diversify energy sources and reduce reliance on chokepoints like Hormuz. There is also a need for international coordination to supply food and fertilizers during crises. The report ends by stressing that prolonged conflict worsens the damage over time, especially for poorer countries, making stability and de-escalation economically important.