WTO chief warns Hormuz disruptions pose worst trade threat in 80 years

World Trade Organization Director-General Ngozi Okonjo-Iweala warned on Monday that disruptions in the Strait of Hormuz pose the gravest threat to global trade in eight decades, threatening to drive up food and fertilizer costs as the Middle East conflict tests the resilience of international supply chains. Speaking on the sidelines of the WTO’s Public Forum in Geneva, Okonjo-Iweala told Anadolu that while the multilateral trading system has absorbed recent shocks, prolonged blockades of the vital waterway will inevitably strain agricultural markets worldwide.

Trade momentum defies forecasts

Global goods trade expanded by an unexpectedly robust 4.6% this year despite mounting geopolitical pressures, with 72% of all commerce continuing to operate under WTO regulations. The figure significantly outpaced the organization’s initial 1.9% projection for 2024, buoyed by first-quarter growth of 3.2% that reflected surging demand in artificial intelligence-related sectors. Okonjo-Iweala noted that much of this acceleration stemmed from low- and zero-tariff agreements covering $3 trillion in semiconductor and chip trade, though she cautioned that the economic benefits remain concentrated in North America and East Asia.

Hormuz blockade threatens agricultural costs

The WTO chief warned that while national reserves have temporarily insulated markets from Hormuz-related disruptions, sustained blockades will translate into higher agricultural costs for import-dependent nations. Maritime operators have maintained volumes by rerouting vessels around the chokepoint, but these lengthy detours are adding steep premiums that threaten long-term supply stability. Previous WTO estimates indicated that crude oil prices exceeding $90 per barrel could reduce overall trade growth by 0.5 percentage points, a threshold that current prices have already surpassed.

Institutional overhaul urged

Governments worldwide are drafting contingency plans against future chokepoint failures, even as internal WTO discussions intensify over modernizing trade rules for the twenty-first century. Okonjo-Iweala stated that comprehensive institutional reform is essential for equitable development, noting that the current framework has frequently disadvantaged developing countries. A recent WTO report estimated that institutional failure and eroding multilateral cooperation could erase up to 10% of potential global economic growth by 2050.