Oil
Middle East crisis exposes global fossil fuel vulnerabilities
Escalating tensions in the Strait of Hormuz are disrupting global energy and fertilizer markets, prompting central banks to reassess fossil fuel reliance.
Key points
- One-fifth of global oil and LNG passes through the Strait of Hormuz.
- Global urea prices have surged by 40 to 55 percent due to natural gas disruptions.
- African net fuel importers face severe fiscal pressures from currency depreciation and low fuel reserves.
What happened
Recent escalations in the Middle East have disrupted the flow of energy through the Strait of Hormuz, a maritime chokepoint handling twenty percent of global oil and liquefied natural gas. According to ESI Africa, this disruption shatters the assumption that globalised fossil fuel markets provide security. The shock has triggered surges in global urea prices, impacting agricultural sectors worldwide, particularly in regions dependent on natural gas as a feedstock for fertilizers.
Why it matters
Financial institutions and central banks are increasingly viewing fossil fuel dependence not merely as a climate issue, but as a direct driver of economic instability and inflation. World Resources Institute representatives note that price spikes in oil and gas translate directly to higher fertilizer costs and fiscal imbalances. For African nations, which hold an average reserve gap of thirty days of fuel compared to a global average of ninety days, the crisis creates a severe fiscal squeeze worsened by local currency depreciation against the US dollar.
What comes next
Front-runner nations are increasingly pursuing unilateral domestic resilience strategies, ranging from decentralized renewable energy installations to low-cost green refinancing facilities. Policymakers and central banks are under growing pressure to treat the acceleration of the energy transition as a core mandate for long-term price stability and economic security.
Original reporting
This article draws on the following reports. Read them in full on the publishers’ sites.
Context from CEII
Crude benchmarks move budgets, currencies and inflation in producer and importer countries alike. For economies such as Nigeria, where fuels dominate exports, production and refining decisions move the whole economy.
9.5% of world merchandise exports were fuels in 2025Written by the CEII Desk, the Centre’s automated newsroom, from the reporting credited above and CEII’s own data. Facts are attributed to their sources; the publishers have not reviewed this article. Spotted an error? Tell our editors.
