Iran conflict expected to raise fuel, food and shipping costs across Caribbean for the rest of 2026

MIAMI--The conflict involving Iran is expected to affect Caribbean and Latin American countries throughout 2026, mainly through higher fuel prices, increased shipping costs, more expensive food and continued pressure on household budgets.

A new report from the United Nations Economic Commission for Latin America and the Caribbean, ECLAC, says the effects of the conflict will continue even if fighting decreases and diplomatic negotiations move forward.

The conflict has continued to disrup the movement of oil and other goods through the Strait of Hormuz, one of the world’s most important shipping routes for energy supplies. Although efforts have been made to reopen the route and restore commercial traffic, shipping activity remains below normal levels.

Security concerns, delays and higher insurance costs for ships are also making the transportation of goods more expensive.

ECLAC expects the average price of oil in 2026 to be between 20 and 25 per cent higher than it was in 2025. This would affect most Caribbean countries because they import much of the fuel used to generate electricity, operate vehicles and transport goods.

Countries that produce and export oil may benefit from higher prices. However, most Caribbean countries are energy importers and are therefore expected to face additional costs.

For consumers, the effects could be seen at gas stations, on electricity bills and in supermarkets. When fuel becomes more expensive, businesses also pay more to transport and distribute products. Those additional costs are often passed on to customers.

Food prices could also increase because the Persian Gulf is an important source of fertiliser. Higher fertiliser prices make farming more expensive and could eventually lead to higher prices for imported and locally produced food.

Governments may face pressure to reduce fuel taxes, provide subsidies or introduce other measures to protect residents from rising costs. However, these measures can place additional strain on public finances, particularly in countries that do not earn revenue from oil and gas exports.

ECLAC said the conflict could also slow global economic growth. A weaker world economy may reduce demand for exports, affect tourism and make it more difficult for Caribbean countries to attract investment.

Higher inflation in major economies could also cause international interest rates to remain high for longer. This would make borrowing more expensive for Caribbean governments, businesses and households.

A stronger United States dollar could create further pressure for countries whose currencies are not directly tied to the dollar, particularly when paying for imported food, fuel and other essential goods.

According to ECLAC, the region as a whole may appear less exposed than some other parts of the world because several large Latin American countries export oil. However, that overall picture does not reflect the situation facing most small Caribbean states.

For the majority of Caribbean countries, the main effects are expected to be higher import costs, rising prices, increased pressure on government budgets and a greater risk of food insecurity.

ECLAC said these effects may continue throughout 2026 because changes in fuel, shipping and fertiliser prices often take several months to reach consumers.

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