Escalating tensions in the Middle East have triggered a sharp surge in global shipping costs, with Nigerian importers and shippers warning of severe economic fallout as war-risk insurance premiums quadruple from $250,000 to $1 million per voyage.
Industry stakeholders say the spike—linked to disruptions in the strategically vital Strait of Hormuz—could lead to a 30 per cent drop in Nigeria’s import volumes within weeks, while also fueling inflation and threatening widespread job losses.
Shipping Disruptions Rattle Global Trade
According to the United Nations Conference on Trade and Development (UNCTAD), the increase in insurance premiums follows a near-collapse in vessel traffic through the Strait of Hormuz, one of the world’s most critical maritime corridors.
Daily ship movements through the route have reportedly plunged by 97 per cent—from an average of 141 vessels in February to single-digit figures in early March—amid rising security concerns.
The waterway accounts for roughly 25 per cent of global seaborne oil trade, handling about 20 million barrels per day, making it a linchpin in global energy supply chains.
Freight markets have reacted sharply to the disruption. Between late February and early March, dirty tanker rates surged by 54 per cent, while clean tanker rates climbed by 72 per cent, reflecting tightening vessel availability and heightened risk exposure.
Fuel, Freight and Energy Prices Surge
The cost pressures extend beyond insurance. Bunker fuel prices have nearly doubled, with low-sulphur fuel rising by 99 per cent and high-sulphur fuel increasing by 100 per cent.
Energy markets have also responded strongly, with oil prices climbing 27 per cent to about $91.8 per barrel, while natural gas prices surged by 74 per cent within the same period.
UNCTAD further warned that the Strait of Hormuz is a critical route for fertiliser shipments, accounting for nearly one-third of global seaborne fertiliser trade—raising fresh concerns over food security, particularly in developing economies like Nigeria.
Inflation and Job Losses Loom
Economic experts say the ripple effects of rising shipping costs will be felt across Nigeria’s economy, particularly in import-dependent sectors such as manufacturing and retail.
Dr Muda Yusuf, Executive Director of the Centre for the Promotion of Private Enterprises (CPPE), warned that the increase in war-risk premiums would inevitably translate into higher prices for goods and services.
“The implication is clear—it will have an inflationary effect. The progress made in slowing inflation could be reversed if this situation persists,” he said.
He noted that rising operational and production costs would weaken consumer purchasing power and strain household welfare, adding that some businesses may be forced to shut down under mounting financial pressure.
“There is a limit to how much cost businesses can pass on to consumers. Beyond that, some may simply not survive,” he added.
Importers Brace for Cost Shock
Shipping industry players also warned of a sharp rise in freight charges, which will further inflate the cost of imported goods.
Dr Kayode Farinto, a former spokesperson for the Shippers Association of Lagos State, said the impact on importers would be immediate and severe.
“A consignment that used to cost $4,000 could now rise to $6,000. These additional costs will ultimately be passed on to consumers,” he said.
He described the development as “a very bad omen” not only for Nigeria but for global trade as a whole.
Call for Government Intervention
To cushion the impact, stakeholders are urging the Federal Government to introduce emergency measures, including the suspension of port-related charges imposed by agencies such as the Nigerian Ports Authority (NPA) and the Nigerian Maritime Administration and Safety Agency (NIMASA).
Dr Yusuf argued that temporary waivers could help offset rising maritime costs and protect businesses from collapse.
“If nothing is done, ordinary Nigerians will bear the brunt. The government must act to mitigate these pressures,” he said.
Global Uncertainty Raises Stakes
UNCTAD cautioned that the duration and intensity of the Middle East crisis will determine the scale of its global economic impact, warning that vulnerable economies with high debt burdens and limited fiscal space are most at risk.
With oil prices already trading above $90 per barrel, the agency called for urgent diplomatic efforts to de-escalate tensions and safeguard critical maritime routes.
