Assessing the Impact of Strait of Hormuz Disruption on Somalia’s Trade-flow System; The Case Study for Puntland State of Somalia, 2026

This report assesses the implications of the Strait of Hormuz disruption and broader Gulf geopolitical tensions on Somalia's trade-flow system, using Puntland State as a representative case study. The analysis examines how disruptions to strategic maritime corridors influence shipping routes, logistics systems, import and export dynamics, livestock trade, and domestic market stability. Drawing upon secondary macroeconomic and trade data, Bosaso Port maritime statistics, Consumer Price Index (CPI) trends, and qualitative evidence from key market stakeholders, the study provides an integrated assessment of the transmission of external geopolitical shocks into Somalia's economy. The findings demonstrate that Somalia's economy remains structurally vulnerable due to its heavy dependence on imported food, fuel, construction materials, fertilizers, and other essential commodities, while export earnings remain concentrated in livestock destined primarily for Gulf markets. Consequently, disruptions affecting the Strait of Hormuz and adjacent maritime corridors have increased freight costs, marine insurance premiums, shipping delays, and logistical uncertainty, transforming Somalia's trade environment into one characterized by higher costs and lower predictability. Evidence from Bosaso Port indicates declining export vessel activity alongside increasingly volatile import movements, reflecting reduced export reliability and persistent pressure on supply chains. These disruptions have contributed directly to rising domestic prices, with CPI data for Puntland showing significant increases in food commodities, fuel, cooking gas, housing, utilities, and construction materials from March 2026 onwards. The report concludes that these price movements represent the transmission of external trade shocks into domestic inflation, reducing household purchasing power and increasing the cost of living. The assessment further identifies the livestock sector as one of the country's most exposed economic sectors. Given its dependence on Gulf markets and the seasonal concentration of exports during the Hajj period, any interruption to maritime trade routes significantly increases the risk of foreign exchange losses, declining pastoral incomes, and weakened national export performance. These vulnerabilities are further intensified by prolonged drought conditions, which continue to reduce livestock productivity and constrain export supply. Overall, the report concludes that Gulf geopolitical tensions constitute a structural rather than temporary challenge to Somalia's economy. Their impacts extend beyond trade, affecting macroeconomic stability, market performance, household welfare, fiscal resilience, and national economic security. Without strategic measures to strengthen supply-chain resilience, diversify exports, improve logistics systems, and enhance domestic productive capacity, Somalia's trade system will remain highly exposed to recurring external shocks, posing significant risks to sustainable economic growth and long-term development.