WTO chief says Hormuz bottlenecks are the worst trade shock in 80 years

World Trade Organization Director-General Ngozi Okonjo-Iweala said on 18 September that bottlenecks in the Strait of Hormuz now amount to the gravest disruption to global trade in eight decades. She spoke to Anadolu on the sidelines of the WTO Public Forum in Geneva, where 166 member governments are meeting against a Middle East war that has already pushed crude above the $90-a-barrel mark her own staff once treated as a stress test.

Goods trade has not collapsed. Okonjo-Iweala said volume is up 4.6 percent so far this year, well above the WTO's original full-year forecast of 1.9 percent. First-quarter growth came in at 3.2 percent. She also said 72 percent of world commerce still moves under WTO rules. Those figures are the part of her briefing that markets have used as a comfort. The rest of it is not comforting.

What $90 oil does to the forecast

Earlier WTO work estimated that oil at $90 a barrel would shave about 0.5 percentage points off global goods-trade growth. Prices have already crossed that line. Okonjo-Iweala's point was narrower than a headline about war risk. National fuel and grain reserves have so far absorbed the first shock from reduced traffic through Hormuz. If the waterway stays obstructed, she said, the next pressure will land on food and fertiliser prices in import-dependent countries.

Shipowners have kept tonnage moving by sending vessels on longer routes. Those detours preserve headline volumes while adding freight premia that compound week after week. The director-general said that pattern cannot be treated as a durable substitute for the strait. Hormuz still sits on the path that, in a normal year, carries a large share of seaborne oil and a thick slice of the ammonia and phosphate trade that farms in Asia and Africa depend on.

Two other chokepoints sit in the same brief

The Public Forum conversation did not stop at Hormuz. Security risks in the Red Sea and at Bab al-Mandab are already forcing carriers to treat the Suez route as unreliable. Irish Finance Minister Paschal Donohoe has separately told European colleagues that the energy squeeze in Europe this autumn is being driven more by Hormuz than by the war in Ukraine. French President Emmanuel Macron has said he will convene G7 energy talks on the same cluster of risks.

Okonjo-Iweala framed the Middle East fighting as a test for an institution that has spent three years watching members raise tariffs, export controls and industrial subsidies. She said many United States criticisms of the multilateral system are valid. She also said the recent goods boom is concentrated in North America and East Asia, which leaves large parts of Africa and Latin America with little of the upside and most of the freight inflation.

Rules that have not been rewritten

Inside the WTO, officials have been arguing over how to modernise rule books written for a world of falling tariffs rather than weaponised chokepoints. Okonjo-Iweala warned that a failure to update those rules would put about 10 percent of potential trade growth out of reach. She asked developing-country members to write themselves into that rewrite instead of waiting for the largest economies to set the terms.

Governments are already drawing contingency plans for the next closed strait. Pipeline projects that bypass Hormuz have been discussed in Gulf capitals for years. Few of them can be built on the timetable of a harvest season. For wheat importers in North Africa and fertiliser buyers in South Asia, the relevant number is not the 4.6 percent goods-trade print. It is how long ships can keep paying the longer-route premium before that cost is printed on a food bill.

The Public Forum will not vote on Hormuz. It will, if Okonjo-Iweala's warning is taken at face value, have to decide whether the trading system can still price a waterway that no longer behaves like a public good.