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.