High crude and fuel prices threaten least developed countries and small island states.
A 50% oil price rise could add $20.4 billion to their annual import bills.
This will strain public finances, fuel inflation, widen current account deficits and deepen poverty for nearly a billion vulnerable people worldwide.
Disruptions in the Strait of Hormuz following military escalation in the Middle East have sharply increased global oil and fuel prices, threatening to deepen economic vulnerabilities across least developed countries (LDC) and small island developing states (SIDS), according to a new report released by the United Nations Conference on Trade and Development (UNCTAD).
The report, Strait of Hormuz Disruptions: The burden of oil price shocks on vulnerable economies, estimates that a 50 per cent rise in oil prices could increase the annual oil import bill of vulnerable economies by $20.4 billion a year, putting additional pressure on public finances, inflation and economic growth.
LDCs would account for $16.1 billion of the increase, while SIDS would face an additional $4.3 billion burden. Several countries could see oil import costs rise significantly relative to the size of their economies.
Of the 75 vulnerable economies assessed by UNCTAD, 65 are net importers of oil. These countries are home to 983 million people, with more than 30 per cent living below the extreme poverty line of $3 a day. "Without relief, these shocks will further entrench structural vulnerabilities," UNCTAD said.
According to UNCTAD, crude oil prices have increased by more than 40 per cent, while gasoline prices have risen by more than 50 per cent since the military escalation that began on February 28, 2026. The analysis compares average prices during January 2024 to February 27, 2026 with prices recorded between February 28 and May 28, 2026.
The report highlighted that 86 per cent of vulnerable economies are net oil importers, including 87 per cent of LDCs and SIDS. Most of these countries lack refining capacity and rely heavily on imported fuel.
Refined petroleum products account for 97.8 per cent of their net oil imports, while crude oil represents just 2.2 per cent. As a result, rising fuel prices are transmitted quickly across economies through higher transport, electricity and food costs.
Among LDCs, Mauritania could face an increase in oil import bill equivalent to 7.3 per cent of GDP, followed by Gambia at 6.3 per cent, Burkina Faso at 5 per cent, Liberia at 4.8 per cent and Zambia and Lesotho at 4.3 per cent each.
Other countries facing substantial impacts include Mali at 3.8 per cent of GDP, Central African Republic at 3.7 per cent, Myanmar at 3.4 per cent, Cambodia and Mozambique at 2.8 per cent each, Malawi at 2.2 per cent and Bangladesh at 0.8 per cent.
Among SIDS, Vanuatu could see oil import costs rise by 5.8 per cent of GDP, followed by Maldives at 5.2 per cent, Tonga at 4.4 per cent, Mauritius at 4.2 per cent and Fiji at 3.2 per cent.
The report also noted that some countries may struggle to secure alternative oil supplies because of their heavy dependence on imports from the Hormuz region, which includes Bahrain, Iran, Iraq, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates.
Seychelles sources 99 per cent of its oil imports from the region, followed by Uganda at 61.5 per cent, Mauritius at 58.3 per cent, Tanzania at 56 per cent and Zambia at 44.7 per cent. Maldives imports 43.1 per cent of its oil from the region, while Mauritania depends on it for 43 per cent of supplies.
UNCTAD identified four major risks arising from the oil shock.
Higher oil prices increase freight and fuel costs, pushing up the overall cost of goods.
Inflationary pressures intensify as fuel dependent economies experience higher living costs and rising prices across sectors.
Governments face growing fiscal pressure as they balance support for households against spending on essential services and long term development priorities.
Rising import bills can also widen current account deficits, weaken currencies, tighten credit conditions and slow economic growth, particularly in countries with limited fiscal space.
The report underscored the need for international support and measures that strengthen energy resilience in vulnerable economies.
Reducing dependence on imported fuels through investments in renewable energy, expanding domestic energy infrastructure and diversifying fuel supply sources can help countries reduce exposure to future shocks.
Strengthening social protection systems and providing targeted support to vulnerable households will also be critical in cushioning the impact of rising energy costs.