Negotiations between the United States and Iran are approaching a potential breakthrough, but the issue goes beyond a ceasefire or nuclear deal. The core question is whether the world economy can avoid sinking deeper into spreading energy, food, and cost-of-living crises centered around the Strait of Hormuz.
Recent reports indicate Washington and Tehran are discussing a deal to reopen the strait as part of a broader arrangement. The proposal is said to include a 60-day ceasefire, reopening shipping routes, easing some sanctions, and resuming talks on Iran’s nuclear program.
The urgency is clear. About one-fifth of the world’s oil and a significant portion of liquefied natural gas typically pass through the Strait of Hormuz. In recent weeks, shipping disruptions, military tensions, and competing maritime control measures have pushed up shipping costs, energy prices, and insurance premiums. If a sustainable deal is not reached soon, the consequences could quickly ripple through the entire global economy.
Wealthy economies will certainly feel the impact. Higher fuel prices will add to inflation pressures already weighing on households in Europe and North America. Governments facing slowing growth and cost-of-living concerns will come under new political pressure as gasoline, electricity, and food prices rise again. But the impact will be far more severe in the Global South.
Many developing economies remain deeply dependent on imported fuel, fertilizers, and food. Energy shocks propagate through entire economies, raising transport costs, making agricultural production more expensive, accelerating food inflation, and worsening public finances. In some import-dependent countries in Africa and South Asia, governments are struggling to secure alternative fuel supplies while facing deteriorating fiscal pressures.
The Strait of Hormuz is not just a regional waterway; it is one of the lifelines of global capitalism. When it is militarized or partially blocked, the consequences ripple worldwide within days. Food prices are particularly sensitive to these disruptions because energy markets and food systems are closely linked: fertilizer production depends on natural gas, and refrigeration and transport costs depend on oil prices.
That is why reopening the Strait of Hormuz is not only a matter of strategic stability for Washington or Tehran, but a global economic necessity. Although deep disagreements remain over sanctions, uranium enrichment, regional security, and the future governance of Gulf shipping, tensions over who controls transit through the strait continue. There is no guarantee a ceasefire will hold, but the alternative is increasingly dangerous.
A prolonged disruption at the Strait of Hormuz would not just be a regional crisis; it would deepen inflation, worsen food insecurity, strain humanitarian systems, and heighten the risk of political instability in vulnerable economies. The current negotiations extend far beyond U.S.-Iran diplomacy; they determine whether the world can avoid another cascading global crisis driven by energy insecurity, geopolitical fragmentation, and rising inequality.
The Strait of Hormuz cannot remain closed—economically or politically—without consequences for everyone.
