The conflict initiated by the United States and Israel involving Iran, and the subsequent closure of the Strait of Hormuz, is having far-reaching consequences beyond the immediate region, including significant economic strains and social unrest in countries thousands of miles away. Nations in Africa, such as Comoros, Kenya, and Mozambique, are already experiencing protests and strikes triggered by sharp increases in fuel prices directly linked to the crisis.
In Comoros, an attempted 35 percent hike in gasoline prices, attributed to the Iran war's impact on the global market, led to public protests, roadblocks, and clashes with security forces, prompting the government to suspend the price increase. Similarly, Kenya saw four deaths in May during protests over rising fuel costs, and bus drivers in Maputo, Mozambique, went on strike due to a 46 percent increase in diesel prices, paralyzing the capital. These demonstrations are primarily directed at national governments, highlighting how geopolitical events can exacerbate existing domestic economic pressures.
The Coming Food Shock
Experts warn that the current situation could lead to a substantial rise in food prices in the coming months. The Strait of Hormuz is a critical artery for global trade, with nearly a third of the world's fertilizer passing through it. The closure not only increases fertilizer costs directly but also drives up food prices through higher transportation and irrigation expenses. Cullen Hendrix, senior fellow at the Peterson Institute for International Economics, noted that "energy is kind of the master cost in the economy that determines virtually every downstream cost."
The full economic impact may not be fully realized for several months. The United Nations' Food and Agriculture Organization has cautioned that the Strait of Hormuz closure represents "the beginning of a systemic agrifood shock that could trigger a severe global food price crisis within six to 12 months." The World Food Program estimates that if oil prices remain around $100 per barrel, an additional 45 million people could face acute food insecurity.
In developed nations like the United States, this could translate to higher food costs for struggling families and political challenges for incumbent leaders. However, the impact is expected to be more severe in lower-income countries. Historical patterns, such as the 2008 commodity price spikes and the 2011 Arab Spring, demonstrate a strong correlation between rising food prices and political instability, including anti-government demonstrations, riots, and violent conflict. Rabah Arezki, senior fellow at Harvard’s Kennedy School, explained that price rises act as a trigger, particularly in countries already experiencing high unemployment and existing grievances.
A Perfect Storm for Food Insecurity
The current global food crisis is occurring at a particularly challenging time. The World Food Program has faced significant budget cuts, partly due to reduced aid from the United States. Forecasters also predict a potentially severe El Niño event this summer, which could further strain global food supplies through droughts and excessive rainfall.
Long-Term Conflict Implications
While the crisis stemming from the Strait of Hormuz closure could theoretically be resolved if the strait reopens, its effects on energy and food markets are expected to linger. The United States and Israel are relatively insulated from these impacts due to their domestic resources, but poorer nations are bearing the brunt of the economic fallout. Even Iran faces rising food prices under sanctions.
The potential for widespread unrest in affected countries could also draw in the United States militarily. Historical precedents, such as the Arab Spring contributing to interventions in Libya and the fight against ISIS, suggest that regional instability can lead to increased American involvement. The U.S. is already engaged in counter-terrorism operations in Somalia and Nigeria, regions where food insecurity is a significant driver of conflict. This suggests that the economic consequences of the current conflict could extend far beyond immediate price shocks, potentially leading to future U.S. military commitments.