Global Economy Faces Renewed Threat If Strait of Hormuz Crisis Drags On – IEA Boss Warns

The global economy faces a fresh challenge if the conflict disrupting traffic through the Strait of Hormuz is not resolved within weeks, the International Energy Agency’s Executive Director Fatih Birol has warned. Speaking on the sidelines of the Aspen Security Forum in Colorado on Wednesday, Birol said markets are nervous and grappling with big uncertainty as attacks escalate on both sides.

Strait Traffic Thins as Attacks Mount

Visible traffic through the Strait of Hormuz has thinned markedly over the last week. Vessels have been attacked, and the US has reimposed its blockade of Iranian shipping. Saudi Arabian oil loadings from inside the Persian Gulf have slumped following strikes on supertankers. The International Maritime Organization has declared that the waterway remains too dangerous for commercial vessels to transit.

Birol stressed the urgency of the situation. “If the Strait of Hormuz remains closed we may again have some difficulty for global economies, including those in the region and developing nations and Asia,” he said. “It is not months, it is weeks” after which the strait needs to be “fully open, unconditionally open.”

Disruption Hits Asian Economies Hardest

The disruption to Persian Gulf energy and feedstock deliveries has already impacted economies such as South Korea and Japan. But Birol warned that countries like Bangladesh, Pakistan and India are far more vulnerable to such cutoffs. These nations depend heavily on oil, fertilizer and natural gas shipments that pass through the strategic waterway.

What This Means for Nigeria and the Naira

For Nigeria, any sustained closure of the Strait of Hormuz could push global oil prices higher in the short term, boosting government revenues. However, higher energy and fertilizer costs also risk stoking imported inflation, putting additional pressure on the naira and raising the cost of living for Nigerian consumers and businesses.