East Africa in the Two-Strait Squeeze

ENGLISH EDITION

How Hormuz and Bab el-Mandeb Are Repricing Life, Trade, and Development

Date: 30 July 2026

Byline: Anthony Kon | Sarkon Plus Publishing

Executive Summary

At first glance, the conflict affecting the Strait of Hormuz and Bab el-Mandeb may appear distant from everyday life in East Africa. Yet its economic consequences are already travelling toward the region through a familiar chain of pressures: higher fuel and fertilizer prices, costlier shipping and insurance, tighter foreign-exchange conditions, weaker household purchasing power, and greater demands on public budgets.

The important point is that the region’s principal vulnerability does not arise from direct participation in the conflict. It arises from structural dependence. Most East African and Horn economies import petroleum products, rely on maritime trade, operate with limited fiscal space, and remain exposed to food insecurity and climate shocks. Several also depend on Gulf markets for employment, remittances, investment, aviation, tourism, and commercial services.

To understand why this matters, it helps to see Hormuz and Bab el-Mandeb as parts of one connected economic system. Disruption at Hormuz constrains energy and fertilizer exports from the Gulf region. Pressure at Bab el-Mandeb then obstructs the most direct maritime route between those supplies and ports serving the Horn, East Africa, the Red Sea, the Mediterranean, and Europe. Ships can travel around the Cape of Good Hope, but the alternative adds time, fuel use, freight costs, and uncertainty.

The effects are uneven. Coastal logistics centres may gain temporary activity from rerouting, while importers and consumers absorb higher costs. Oil-exporting states may benefit from stronger reference prices, but only when their own production and export systems remain operational. Countries with high debt, weak currencies, limited reserves, or humanitarian emergencies face the greatest danger.

The central policy challenge is not to predict the next military development. It is to prevent an external transport and commodity shock from becoming a prolonged regional development crisis.

A Dual-Chokepoint Economic Shock

The Strait of Hormuz is one of the world’s most important energy and fertilizer routes. The International Monetary Fund reported that the disruption effectively removed about 20 million barrels per day of crude oil and refined products from normal transit at the height of the shock—approximately one-fifth of global consumption. The African Development Bank has also noted that roughly one-quarter of global ammonia trade and more than one-third of seaborne urea normally pass through Hormuz.

Bab el-Mandeb, between Yemen and Djibouti, forms the southern entrance to the Red Sea. It connects the Indian Ocean with the Suez Canal and Mediterranean markets. The IMF reported in April that traffic through Bab el-Mandeb remained at roughly half its pre-disruption level, more than two years after attacks on commercial shipping began.

The two waterways are economically connected. When Hormuz becomes unreliable, Gulf producers try to redirect supplies through pipelines and Red Sea terminals. When Bab el-Mandeb is also unsafe or commercially unattractive, that alternative loses much of its value. Ships may instead travel around southern Africa, increasing transit time, fuel consumption, vessel demand, insurance exposure, and delivery uncertainty.

For East Africa, this is not simply a distant shipping problem. It changes the landed cost of fuel, fertilizer, machinery, medicines, food, and consumer goods.

The First Transmission Channel: Fuel, Inflation, and Household Welfare

Where are people likely to feel the pressure first? Fuel is the most immediate channel through which the conflict enters East African economies.

The IMF reported in June that several African countries were already managing fuel shortages and that petrol prices in Rwanda and Tanzania had increased by about half since the conflict began. Ethiopia, Malawi, and Zambia were among the countries experiencing shortages. The precise effect varies according to domestic pricing rules, taxes, subsidies, exchange rates, inventories, and procurement arrangements, but the direction of pressure is clear.

Higher fuel costs spread quickly:

• Public and private transport becomes more expensive.

• Farmers pay more to operate machinery and move produce.

• Businesses face higher electricity and generator costs.

• Construction and manufacturing expenses rise.

• Distributors pass transport costs into food and retail prices.

• Airlines face higher operating costs and possible route disruption.

Lower-income households carry a disproportionate burden because food, transport, cooking energy, and electricity absorb a larger share of their income. Even when governments temporarily cap prices, the cost does not disappear. It moves to public budgets, state-owned suppliers, unpaid subsidies, or future tax obligations.

The IMF estimates that, under a severe downside scenario, sub-Saharan African output in 2026 could fall 0.6 percent below pre-conflict forecasts while inflation could rise by an additional 2.4 percentage points. Its April regional outlook projected growth at 4.3 percent—0.3 percentage point below the pre-conflict projection—with oil-importing, non-resource-rich countries facing the greatest deterioration in trade balances and living costs.

The Second Channel: Fertilizer, Agriculture, and Food Security

The next effect is less immediate, but it may last longer. The conflict’s agricultural consequences can continue well beyond the first fuel-price shock.

Natural gas is a major input in nitrogen-fertilizer production. Energy is also required to manufacture, ship, distribute, and apply agricultural inputs. Disruption at Hormuz therefore affects both the availability and price of fertilizer before East African farmers begin planting.

The World Bank reported that urea prices rose 46 percent in one month and projected average fertilizer prices to increase by 31 percent in 2026. It warned that fertilizer affordability could deteriorate to its weakest level since 2022. The African Development Bank has cautioned that interrupted ammonia, urea, phosphate, and sulphur flows could leave millions of African farmers without essential inputs.

The risk develops in stages:

1. Importers and distributors pay more or receive shipments later.

2. Retail fertilizer prices rise.

3. Farmers reduce application rates, cultivate less land, or borrow at higher cost.

4. Yields weaken in later harvests.

5. Food prices rise even after the original shipping disruption has eased.

This lag matters. A reduction in fertilizer use today may not appear in inflation data immediately, but it can lower food production months later.

The humanitarian baseline is already severe. The World Bank estimated that up to 67 million people needed food assistance in East and Southern Africa in May 2026. The IMF has warned that a 20 percent rise in international food prices could push more than 20 million additional people into food insecurity across sub-Saharan Africa and leave two million children under five acutely malnourished.

This is why the maritime crisis must be treated as a development and humanitarian issue, not only as an energy-market event.

The Third Channel: Ports, Corridors, and Landlocked Economies

It is tempting to view this as a problem only for coastal states. In reality, East African exposure is shaped by trade corridors as much as by coastlines.

Mombasa and Dar es Salaam serve their national economies and large landlocked hinterlands. Higher freight and insurance costs at the coast are transmitted inland through road, rail, storage, handling, and financing charges. Uganda, Rwanda, Burundi, South Sudan, eastern Democratic Republic of the Congo, and parts of Ethiopia therefore experience maritime disruption through the regional corridors on which they depend.

Djibouti is especially exposed because its economy is built around port services, logistics, military-base revenue, and Ethiopian transit trade. Disruption may produce some additional demand for storage or transshipment, but prolonged insecurity can reduce traffic, delay investment, raise operating costs, and weaken Ethiopia-linked activity.

Somalia and Eritrea may similarly gain strategic attention because of their coastlines and proximity to Red Sea routes. Yet strategic location is not the same as broad economic benefit. Port opportunities require security, dependable institutions, infrastructure, finance, and commercial confidence. Higher military and insurance risk can easily outweigh additional vessel traffic.

Kenya and Tanzania occupy a more diversified position. Their ports may receive additional activity as firms seek alternative routes, but importers still pay more for fuel, fertilizer, machinery, and manufactured goods. Congestion, longer vessel rotations, and more expensive working capital can erode any logistics gains.

The Cape route creates a similar paradox for southern and eastern Africa. More ships passing around the continent may increase demand for bunkering, maintenance, crew services, and port calls. But the wider economy pays through longer journeys and more expensive imports. A port can gain business while households lose purchasing power.

The Fourth Channel: Foreign Exchange, Debt, and Public Budgets

The pressure does not stop at ports, fuel stations, or food markets. Higher import costs also create a direct demand for foreign currency.

When the price of petroleum, fertilizer, medicine, and shipping rises, importers require more dollars to purchase the same physical volume. This can weaken currencies, reduce reserves, widen trade deficits, and make external debt service more difficult.

The IMF’s assessment is especially important for East Africa because many countries entered the shock with limited fiscal space and large refinancing needs. Governments face several politically difficult choices:

• Allow domestic fuel and electricity prices to rise.

• Reduce taxes and lose revenue.

• Expand subsidies and increase deficits.

• Accumulate arrears to suppliers.

• Cut development or social expenditure.

• Borrow at higher cost.

Broad fuel subsidies can provide immediate political relief but tend to benefit higher-consuming households disproportionately and can weaken fiscal stability. Targeted, temporary support for vulnerable households, public transport, food distribution, and essential services is generally more sustainable.

Ethiopia illustrates the balance between reform progress and external vulnerability. The IMF reported in July that economic reforms, exports, reserves, and revenue had improved, but described the Middle East conflict as a significant external shock generating short-term financing pressures. For other countries with weaker reserves or less access to concessional financing, the adjustment could be more severe.

The Fifth Channel: Gulf Employment, Remittances, Investment, and Aviation

There is another connection that is easy to overlook: East Africa’s exposure extends well beyond physical imports.

Many households depend on income earned by workers in Gulf countries. Regional airlines connect East African cities with Gulf hubs. Governments seek Gulf investment in agriculture, ports, energy, real estate, telecommunications, and logistics. Tourism and business travel also depend on stable air routes and household confidence.

If the Gulf economy slows, businesses reduce hiring, construction activity weakens, or aviation routes remain disrupted, remittances and service exports may decline. The IMF has specifically warned that Eastern African economies dependent on Gulf trade and remittances face logistical bottlenecks, weaker demand for services, and reduced remittance flows.

These effects may not be uniform. Higher oil prices can strengthen revenue in some Gulf economies, sustaining employment and investment. At the same time, disrupted exports, damaged confidence, and higher security costs can weaken non-oil sectors. East African policymakers should therefore monitor actual remittance receipts, passenger traffic, project disbursements, and investment implementation rather than assuming either an automatic decline or an automatic Gulf windfall.

What This Means Across the Region

The same external shock will not produce the same result everywhere. National exposure depends on geography, trade routes, fiscal capacity, foreign-exchange reserves, and the structure of each economy.

Kenya and Tanzania

Both are exposed through petroleum imports, port operations, road transport, aviation, fertilizer, and consumer prices. Their ports may gain some diversion-related activity, but their economies remain vulnerable to higher import and financing costs. Tanzania has already experienced a sharp rise in petrol prices, according to the IMF.

Uganda, Rwanda, Burundi, and South Sudan

These landlocked economies experience the shock through coastal gateways and inland corridors. Fuel and fertilizer costs accumulate across transport stages. Rwanda has experienced a substantial fuel-price increase. South Sudan’s position is more complex: higher oil prices may raise the value of exports, but revenue depends on secure production, transit infrastructure, and functioning regional logistics.

Ethiopia and Djibouti

Ethiopia faces higher costs for fuel and essential imports while implementing a major economic-reform programme. Djibouti depends heavily on Ethiopian transit trade. A slowdown, foreign-exchange shortage, or reduced import demand in Ethiopia can therefore pass directly into Djibouti’s port and service economy.

Somalia and Eritrea

Both have strategic coastlines but limited capacity to absorb commodity, food, and humanitarian shocks. Higher shipping costs can raise the price of essentials, while insecurity near sea routes may complicate investment and humanitarian delivery.

Sudan and the Wider Red Sea Economy

Sudan faces the most acute interaction between conflict, damaged infrastructure, food insecurity, displacement, and external cost increases. More expensive fuel, food, fertilizer, shipping, and humanitarian logistics compound an already severe crisis. Port Sudan’s importance increases as other domestic systems weaken, making reliable maritime access essential.

Egypt

Egypt is not usually classified solely as East Africa, but it is central to the same maritime system. Alternative routing through pipelines and Mediterranean terminals can increase Egypt’s strategic and logistical importance. At the same time, reduced Suez traffic, higher fuel and food import costs, and pressure on foreign exchange can outweigh those benefits. Egypt is both an alternative corridor and a vulnerable transit economy.

Why the Effects May Outlast the Conflict

Even if military activity declines, we should not expect economic conditions to normalize overnight.

Shipowners and crews require evidence that routes are safe. Insurers must reprice risk. Vessels and containers must return to normal rotations. Inventories need rebuilding, contracts renegotiation, and delayed cargoes clearance. Farmers cannot reverse missed planting decisions, and governments cannot immediately recover reserves or fiscal space used during the shock.

The IMF’s experience with Bab el-Mandeb is instructive: traffic remained around half of its earlier level more than two years after the initial attacks began. A formal ceasefire or reopening announcement therefore does not guarantee immediate commercial recovery.

What East Africa Can Do Now

The region cannot control events at either strait, but it can reduce the extent to which an external shock becomes a domestic crisis. East African governments and regional institutions should focus on resilience rather than broad emergency promises.

1. Protect vulnerable households

Use targeted, temporary support for food, transport, and essential energy rather than open-ended universal subsidies.

2. Coordinate fuel and fertilizer procurement

Regional purchasing, transparent inventories, shared market information, and earlier contracting can reduce competition among neighbouring states during shortages.

3. Diversify ports, suppliers, and corridors

No country should depend on one maritime gateway, one fuel supplier, or one inland corridor where practical alternatives can be developed.

4. Strengthen strategic reserves

Fuel, fertilizer, food, and medical reserves should be governed by transparent release rules and replenishment plans.

5. Protect development spending

Short-term crisis measures should not destroy investment in agriculture, transport, energy, health, and climate resilience—the systems needed to reduce future vulnerability.

6. Improve regional infrastructure

Railways, pipelines, power interconnections, dry ports, storage, and efficient border systems reduce the cost of rerouting and spread risk across several corridors.

7. Expand domestic and regional fertilizer capacity

Africa’s dependence on a small number of external fertilizer hubs leaves food production vulnerable to distant conflict. Investment must be accompanied by affordable finance, reliable energy, transparent distribution, and efficient use.

8. Preserve diplomatic and commercial neutrality

East African governments benefit most from safe navigation, stable commodity markets, and open commercial relations. Their economic interest lies in de-escalation, protection of civilian shipping, and respect for international maritime law.

Conclusion

The clearest way to understand this crisis is to connect distant waterways with daily economic life. Hormuz and Bab el-Mandeb are separated geographically but joined economically. Disruption at the first constrains energy and fertilizer supplies; insecurity at the second obstructs the most direct alternative route. East African economies then absorb the combined shock through fuel prices, freight charges, food systems, foreign-exchange markets, remittances, and public budgets.

But the effects will not be equal. One country’s port may gain activity while its national import bill rises. An oil exporter may receive a higher price while infrastructure constraints limit sales. A wealthier household may absorb higher transport costs while a poorer family reduces food consumption. A government may contain prices temporarily while quietly weakening its fiscal position.

This leads to the central conclusion: not every East African economy will suffer in the same way. What matters most is how pre-existing weaknesses turn an external maritime shock into a domestic social and development crisis.

The appropriate response is equally differentiated but regionally coordinated: protect vulnerable people, preserve fiscal credibility, secure essential inputs, diversify corridors, improve market information, and invest in the infrastructure that makes future disruptions less destructive.

Sources and References | المصادر والمراجع

All sources were checked on 30 July 2026.

1. International Monetary Fund, “Global Disruptions Are Testing How the World Moves Goods and People,” 29 April 2026.
https://www.imf.org/en/blogs/articles/2026/04/29/global-disruptions-are-testing-how-the-world-moves-goods-and-people

2. International Monetary Fund, “The Oil Market Absorbed the War Shock, but Buffers Are Running Low,” 15 July 2026.
https://www.imf.org/en/blogs/articles/2026/07/15/the-oil-market-absorbed-the-war-shock-but-buffers-are-running-low

3. International Monetary Fund, “Africa Faces Mounting Risks Just as Growth Gains Take Hold,” 23 April 2026.
https://www.imf.org/en/blogs/articles/2026/04/23/africa-faces-mounting-risks-just-as-growth-gains-take-hold

4. International Monetary Fund, Regional Economic Outlook—Sub-Saharan Africa: Hard-Won Gains Under Pressure, April 2026.
https://www.imf.org/-/media/files/publications/reo/afr/2026/april/english/text.pdf

5. International Monetary Fund, “How the War in the Middle East Is Affecting Energy, Trade, and Finance,” 30 March 2026.
https://www.imf.org/en/blogs/articles/2026/03/30/how-the-war-in-the-middle-east-is-affecting-energy-trade-and-finance

6. International Monetary Fund, “Global Economy Endures War Shock—So Far,” 15 June 2026.
https://www.imf.org/en/blogs/articles/2026/06/15/global-economy-endures-war-shock-so-far

7. International Monetary Fund, Ethiopia: Fifth Review Under the Extended Credit Facility Arrangement, 13 July 2026.
https://www.imf.org/en/publications/cr/issues/2026/07/13/the-federal-democratic-republic-of-ethiopia-fifth-review-under-the-extended-credit-577662

8. World Bank, “Middle East War to Spark Biggest Energy Price Surge in Four Years,” 28 April 2026.
https://www.worldbank.org/en/news/press-release/2026/04/28/commodity-markets-outlook-april-2026-press-release

9. World Bank, Commodity Markets Outlook, April 2026.
https://thedocs.worldbank.org/en/doc/f3138644a1e8e2bb631399ae11d6c408-0050012026/original/CMO-April-2026.pdf

10. World Bank, Food Security Update, May 2026.
https://www.worldbank.org/en/topic/agriculture/brief/food-security-update

11. World Bank, “World Bank Group Statement on the Conflict in the Middle East,” 26 March 2026.
https://www.worldbank.org/en/news/statement/2026/03/26/world-bank-group-statement-on-the-conflict-in-the-middle-east

12. IMF, World Bank Group and World Food Programme, Joint Statement on Global Economic and Food-Security Impacts, 8 April 2026.
https://www.worldbank.org/en/news/statement/2026/04/08/joint-statement-by-the-heads-of-the-international-monetary-fund-the-world-bank-group-and-the-world-food-programme

13. African Development Bank, “African Governments Need to Take Urgent Action on Fertiliser Shortages,” 28 April 2026.
https://www.afdb.org/en/news-and-events/african-governments-need-take-urgent-action-fertiliser-shortages-92779

14. African Development Bank, The Impacts of the Middle East Conflict on African Economies, 2026.
https://www.afdb.org/sites/default/files/documents/publications/policy_paper-the_impact_of_the_middle_east_conflict_on_african_economies.pdf

15. African Development Bank, African Economic Outlook 2026.
https://www.afdb.org/sites/default/files/documents/publications/afdb26-04_aeo_complete_english_0525.pdf

16. UN Trade and Development, Review of Maritime Transport 2024: Navigating Maritime Chokepoints.
https://unctad.org/publication/review-maritime-transport-2024

17. U.S. Energy Information Administration, World Oil Transit Chokepoints, updated 2026.
https://www.eia.gov/international/content/analysis/special_topics/World_Oil_Transit_Chokepoints/