A recent report by the United Nations Conference on Trade and Development (UNCTAD) has highlighted the disproportionate impact of rising oil prices on developing countries. The surge in oil prices, triggered by the war in the Middle East and the closure of the Strait of Hormuz in February 2026, has led to significant increases in fuel prices in countries such as Nigeria and Myanmar. In Nigeria, diesel prices rose by approximately 83% between late February and late August 2026, compared to a 9% increase in Ireland.
The report attributes these disparities to differences in taxation policies, subsidy mechanisms, price-fixing arrangements, and exchange rate fluctuations, which determine the extent to which global price increases are passed on to consumers. The price of Brent crude oil rose from around $70 in January to over $120 in March, following the closure of the Strait of Hormuz, a critical waterway that transports nearly a fifth of the world's oil. After a brief period of calm between April and June, prices rose again with the failure of diplomatic efforts and the resumption of fighting.
The UNCTAD report warns that the impact of rising fuel prices will be felt far beyond the transportation sector, as higher fuel costs increase the prices of food and consumer goods. Even households that do not directly purchase fuel will be affected, as a 25-cent increase per liter can reduce their purchasing power by more than 5%. Countries heavily dependent on imports are particularly vulnerable, with fuel imports accounting for a significant proportion of their GDP.
In 2023, fuel imports represented around a quarter of Cape Verde's GDP and nearly a fifth of Lebanon's GDP. A higher energy bill reduces the resources available for importing essential goods, such as food, medicine, and equipment, and limits the ability of governments to support households. The UNCTAD is advocating for the diversification of energy sources and increased investment in solar and wind power, which are less exposed to geopolitical tensions.
The report notes that renewable energy sources are already cost-competitive with fossil fuels in over 90% of cases. For developing countries, accelerating the transition to renewable energy is not only a climate imperative but also a means of strengthening their energy security and better insulating themselves against future crises. The UNCTAD is calling for more significant investment in renewable energy to help developing countries mitigate the impact of rising oil prices.
The impact of rising oil prices is being felt across the globe, with many countries experiencing significant increases in fuel costs. The UNCTAD report highlights the need for developing countries to diversify their energy sources and invest in renewable energy to reduce their dependence on fossil fuels. This can help to mitigate the impact of future price shocks and support sustainable economic growth.
The UNCTAD report provides a timely warning about the risks associated with rising oil prices and the need for developing countries to take action to protect themselves against future price shocks. By investing in renewable energy and diversifying their energy sources, developing countries can reduce their vulnerability to fluctuations in global energy markets and support sustainable economic growth.
Key points
- Developing countries are disproportionately affected by rising oil prices due to differences in taxation policies and subsidy mechanisms.
- The UNCTAD is advocating for the diversification of energy sources and increased investment in solar and wind power to help mitigate the impact of rising oil prices.
- Renewable energy sources are already cost-competitive with fossil fuels in over 90% of cases, making them a viable alternative for developing countries.
