For Pacific Island nations, the Middle East crisis is not a distant geopolitical event. It is already showing up in rising fuel prices, uncertainty about electricity, and fears that communities at the far end of global supply chains could be pushed into greater economic insecurity.
“We are at the end of the supply chain,” Toya Altangerel, a senior official at the United Nations Development Programme’s Pacific region, told UN News, “so this energy crisis is already impacting our communities.”
Because Fiji is an important center in the Pacific, the surrounding island nations extend thousands of miles into the world’s largest ocean, with some islands as long as 3,000 miles apart.
In this vast region, isolation from the rest of the world is not only very challenging, but also costly.
From Fiji to Tuvalu, from the Solomon Islands to the Marshall Islands, governments are moving to conserve fuel, protect the most vulnerable families and groups, and keep essential services running.
The immediate concern is not just whether ships will keep moving, but how quickly rising oil prices, shipping costs and disruptions to fuel markets in Asia will impact some of the world’s most remote and import-dependent communities.
What is the importance of the Strait of Hormuz?
The Strait of Hormuz, which has been largely closed over the past month, is crucial to global supply chains, as the waterway carries about 20 percent of the world’s seaborne oil and gas trade.
For the Pacific region, the main risk is that power outages in the Strait could lead to higher fuel prices, fuel costs and freight rates across supply chains in the Asia-Pacific region.
This is important because shipping links to small island communities in the Pacific are concentrated in Asia-Pacific markets. Through these fuel and pricing channels, a distant conflict can strike islands thousands of miles away.
Fragile shipping links, high transportation costs
Maritime transport is the lifeblood of Pacific small island developing states (SIDS), but they have some of the world’s weakest shipping routes, according to the United Nations Trade and Development Agency (UNCTAD).
The Pacific islands have very few direct connections, meaning that food, fuel and cargo are not received directly, but are transferred from ship to ship, driving up prices.
Pacific SIDS also receive very few container ships at port, with some countries receiving only 40 to 50 shipments per year.
Poor connectivity is important because it translates directly into higher costs, especially for fuel that comes from outside the region and requires “broker” fees to move cargoes at ports abroad.
Small island developing states paid twice as much as developed countries in 2022 for the international transportation of imports, according to the United Nations.
For countries on the edge of the system, this means little room to accommodate new disruptions.
Dependence on oil increases the risks
The region is increasingly vulnerable due to its dependence on imported fossil fuels.
Transport consumes about 70 percent of the total imported fuel in the Pacific region, and maritime transport is the main user of fuel in some countries.
This dependence makes Pacific countries highly vulnerable to any disruptions affecting global oil and gas flows, especially through Asian markets that supply or refine fuel to the region.
At the same time, many countries depend almost entirely on fuel. “Tuvalu is definitely at the end of the supply chain, and more than 90 percent of its energy comes from diesel,” Ms. Altangerel said.
She added that UNDP is looking at “insolation of the entire island” as part of the long-term response, stressing that the current shock underscores the urgent need to reduce dependence on imported diesel fuel.
Governments are moving to contain the fallout
Across the Pacific, the UN Development Program said governments have already begun activating emergency measures.
In Fiji, the government warned citizens against panic buying and hoarding amid a sharp rise in fuel prices.
As the supply chain continues to other Pacific countries from Fiji, which is a regional fuel distribution hub, the impacts are becoming more apparent. Tuvalu declared a state of emergency on 14 April. The Marshall Islands declared a 90-day state of economic emergency.
The Solomon Islands government said the country keeps between 40 and 50 days of fuel inside the country.
Vanuatu has warned of rising electricity prices, while Palau, Nauru and Kiribati are also considering responses.
Communities are feeling the pressure
For families, the crisis is very real with many communities already experiencing power outages and unstable service.
In Tuvalu, “we realized that communities were already experiencing power outages on a daily basis,” Ms. Altangerel said.
Power outages are also affecting parts of Fiji, even though it is among the Pacific region’s largest and relatively best-prepared economies, she added.
These challenges are exacerbated by the recent cyclones that passed through Fiji and the Solomon Islands.
Choke point
But the UNDP official warned that the biggest test may still lie ahead if prices rise further in May and beyond.
“The last thing we want is for this vital work to stop because of the energy crisis happening around the world,” she said.
Speaking about Tuvalu’s Coastal Adaptation Plan, which seeks to protect the island from rising sea levels, she said “it will certainly impact this important work that we do.”
For Pacific island countries, the message is stark: what begins as a crisis at a remote shipping point can quickly turn into a crisis of affordability and energy supply, disconnecting vulnerable island communities from the rest of the world and mitigating risks to climate pressures from rising sea levels and extreme weather events.
Source: United Nations
