The immediate impact is visible in sharp increases in transport costs, energy and fertilizer prices, alongside currency pressures and financial market volatility.
“The most immediate economic impact…are considerable increases in freight costs and oil, gas and fertilizer prices,” Hamza Ali Malik, Director of Macroeconomic Policy Division at the UN’s Asia-Pacific development arm (ESCAP) told UN News.
He warned that higher inflation, weaker exports and rising debt risks are likely to follow.
Strait of Hormuz shockwaves
Total number of daily ship transits through Strait of Hormuz.
At the centre of the disruption is the Strait of Hormuz, one of the world’s most critical maritime chokepoints.
The narrow passage carries around a quarter of global seaborne oil trade, along with significant volumes of liquefied natural gas and fertilizers. Escalating hostilities have brought ship transits close to a halt, triggering immediate reactions in global energy markets.
Volatile Brent Crude oil prices have surged well above $100 per barrel, while higher transport and insurance costs are adding to the strain.
These shocks are reverberating across supply chains and raising concerns not only for trade and development, but also for the delivery of humanitarian assistance and essential goods.
Supply chains under pressure
The impact is being felt across all sea routes, with major shipping companies suspending services to the Middle East and containers stranded in congested ports. At least 20,000 seafarers in the region are also affected.
“There are significant early signs of disruption to shipping routes,” said Rupa Chanda, Director of Trade Division at ESCAP, adding that the effects are already hitting key industries.
Shortages of helium and specialised gases from the Gulf are creating a “near-immediate crisis” for semiconductor and advanced electronics production, while disruptions to petrochemical feedstocks threaten manufacturing across major Asian economies.
Fertilizer shortages are also raising concerns about future crop yields across South Asia – home to nearly two billion people – and beyond.
People queue to fill their gas cylinders in Colombo, Sri Lanka. (file photo)
Rising prices hit households
Energy price spikes are feeding directly into inflation and the cost of living.
UN estimates indicate oil prices have risen by around 45 per cent and gas by 55 per cent since late February, with fertilizer prices up 35 per cent. Regional inflation could rise to 4.6 per cent in 2026, up from 3.5 per cent in 2025.
In several countries, higher fuel prices are already pushing up transport, production and food costs, hitting poorer households hardest.
Country-level impacts intensify
In Sri Lanka, where petroleum accounts for about a quarter of total imports, authorities have introduced fuel rationing and cut back public events to conserve supplies. Schools have shifted to a four-day week, while public sector operations have been scaled down.
In Pakistan, fuel and grocery prices surged overnight, and long queues reported at petrol stations. Authorities have introduced fuel conservation measures, including a four-day work week, school closures and work-from-home policies.
Crisis-struck Myanmar is also facing acute pressures. Fuel shortages have led to strict rationing, disrupting transport, businesses and humanitarian operations.
“These disruptions are adding new strain to an economy in Myanmar that was already under pressure,” said Gwyn Lewis, UN Resident and Humanitarian Coordinator ad interim. “Prices are rising, essential goods are harder to find, and families’ purchasing power continues to fall.”
Migrant workers wait outside Tribhuvan International Airport in Kathmandu before departing for work in the Middle East. (file photo)
From economic shock to household crisis
In Nepal, the crisis is being felt not only in economic terms, but in daily life. At least one migrant worker has been killed in the Gulf, dozens injured, and tens of thousands stranded – unable to return home or travel to places of work.
More than 1.7 million Nepali migrants work in the Gulf, accounting for over 65 per cent of overseas labour migration. Remittances – much of them from the Gulf – make up more than a quarter of Nepal’s GDP and support nearly 6 in 10 households.
“This is not a distant crisis for Nepal. It’s very near and very personal,” said Numan Özcan of the International Labour Organization (ILO).
A region at risk
The scale of the impact varies, but if the crisis persists, the consequences will be severe.
ESCAP warns growth across developing Asia-Pacific economies could slow to around 4.0 per cent in 2026, down from 4.6 per cent in 2025. Poverty, food insecurity and inequality could worsen, alongside job losses and possible displacement of migrant workers.
To mitigate the impact, ESCAP calls for coordinated policy action, including targeted fiscal support, cash transfers and support for small businesses.
Countries may also need to tighten monetary policy to manage inflation and financial stability risks, while longer-term efforts should focus on diversifying energy sources, trade routes and supply chains.
An informal sector worker eats by the roadside in Bangkok. (file photo)
The human cost
But beyond the economic fallout, the deeper concern is the human toll – as global shocks are increasingly felt in homes and villages.
“As the crisis continues, the main risk is that an external economic shock becomes a household crisis,” said ILO’s Numan Özcan.
