Four weeks after Iran effectively closed the Strait of Hormuz, global markets are reeling from surging oil prices and supply chain chaos. But low- and middle-income countries face the steepest climb back to stability. Energy intensity—the amount of economic output per unit of energy—explains why some nations suffer more than others.

Since 1990, advanced economies have steadily improved energy efficiency, producing more with less. Meanwhile, developing nations have stagnated, leaving them far more exposed to price shocks. Manufacturing-heavy economies, which dominate the developing world, are inherently more energy-intensive than service-driven ones like the UK. Even among advanced economies, Germany's efficiency gains have outpaced those in poorer nations.

These vulnerabilities threaten to ripple across the global economy. Oil and gas serve as critical inputs for fertilizers, sulphur, and naphtha, the petroleum derivative essential for plastic manufacturing. With shipping disruptions already pushing these commodities toward critical lows, low-income countries face severe risks to food security and manufacturing capacity—sectors that advanced economies depend on for imports.