{"id":26061,"date":"2026-04-02T20:46:26","date_gmt":"2026-04-02T20:46:26","guid":{"rendered":"https:\/\/www.rbc.com\/en\/?post_type=rbc_tl&p=26061\/"},"modified":"2026-04-07T18:30:31","modified_gmt":"2026-04-07T18:30:31","slug":"diesel-debt-and-the-dollar-how-the-wars-triple-squeeze-is-hurting-emerging-markets","status":"publish","type":"rbc_tl","link":"https:\/\/www.rbc.com\/en\/thought-leadership\/the-trade-zone\/diesel-debt-and-the-dollar-how-the-wars-triple-squeeze-is-hurting-emerging-markets\/","title":{"rendered":"Trade Zone: Diesel, debt and the dollar\u2014how the war\u2019s triple squeeze is hurting emerging markets"},"content":{"rendered":"\n
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An emerging crisis<\/h2>\n\n\n\n

As the Middle East crisis drags on, many oil-importing emerging economies face a \u201ctriple squeeze\u201d: rising energy import costs, currency depreciation, and higher rates to reprice debt.<\/p>\n\n\n\n

\"Strait<\/figure>\n\n\n\n

Iran\u2019s virtual blockade of the Strait of Hormuz has sent oil, diesel and gas prices soaring, raising costs for food, fertilizer and transport globally. But it\u2019s developing economies that are bearing the brunt. For several African economies, energy and transport make up 15-25% of the CPI basket,<\/a> a stronger U.S. dollar (up 0.85% against a basket of currencies since the Iran war began) has raised local currency debt service costs. Countries from Argentina to Vietnam<\/a> have embarked on energy conserving measures and\/or initiated emergency consumer support measures to offer some relief. Energy-driven inflation is pressuring central banks to maintain high interest rates<\/a> even as domestic economies slow and foreign exchange reserves are drained. Investor confidence has already taken a hit with the MSCI Emerging Market Index <\/a>wiping out its 13% year-to-date gains, while emerging market bond sales hit their lowest level for March since 2009.<\/p>\n\n\n\n

Emerging markets\u2019 debt vulnerabilities were already at historic highs. Developing countries paid US$741 billion more in debt service than received in financing (2022\u2013202<\/a>4<\/a>). Borrowing costs have risen materially, with post-2020 issuance coming at rates around 10%, roughly double<\/a> pre-pandemic levels. With 29%<\/a> of Low-Income Countries (LIC) bonds maturing by 2026, default risk is rising for some sovereigns. The World Bank says it\u2019s \u201cready to respond at scale<\/a>\u201d to assist emerging markets that have reached out.<\/p>\n\n\n\n

Here are some of the countries that are under strain:<\/p>\n\n\n\n