Gulf War Threatens to Skyrocket Prices in Cuba by Year's End

On February 28, 2026, as the first U.S. and Israeli missiles struck Iranian nuclear sites in Natanz and Isfahan, most Cubans were literally left in the dark. Power outages had already surpassed 15 hours daily across much of the nation. However, what followed would further inflate the scant supplies in Cuba's agricultural markets.

Within less than three weeks, the price of Brent crude oil surged from $67 to over $110 per barrel. The Strait of Hormuz—a crucial passageway for 20% of the world's oil—was effectively blocked. Global prices for wheat, corn, and soybeans hit levels unseen in years. Fertilizers, with nearly a third of the world's nitrogen production coming from the Persian Gulf, saw price hikes ranging from 20% to 77% in mere days.

Economic Devastation Amplified by External Conflicts

For many nations, such a shock would be serious. For Cuba, which has been without foreign oil since December 2025 and where 89% of the population lives in extreme poverty, it's a death sentence.

To grasp why the Gulf conflict impacts Cuba so severely, one must understand the island's condition as of February 2026. When the Cuban regime launched the so-called "Tarea Ordenamiento" in January 2021, the Cuban peso was valued at 24 per dollar. Today, on the informal market—the only realistic place for Cubans to buy foreign currency—it trades at 515 CUP per dollar. Over five years, the currency has lost 95% of its real value. Official inflation for 2025 stood at 14%, while independent economists estimate it to be around 70%. The basic living basket for a person in Havana exceeded 42,000 pesos monthly before the Gulf war even began, while the average state salary hovered around 6,600 pesos.

The Ripple Effect: Oil and Food Prices

Cuba entered 2026 without the two oil sources that had sustained its electrical system for years. Venezuela ceased oil shipments in January after the Trump administration's military intervention ousted Nicolás Maduro. Mexico halted its deliveries under U.S. pressure. The island produces about 40,000 barrels daily—less than half of what it needs—and no tankers found ports willing to accept it: Jamaica, Curaçao, and other Caribbean stops rejected Cuban vessels fearing sanctions from Washington.

This was the starting point before the Gulf war erupted. The connection between the Strait of Hormuz and the price of food in Havana's markets isn't abstract; it's direct, working through three simultaneous channels.

The first is oil. With Brent at $110-120, any supplier Cuba might find on the black market—dodging Trump's sanctions penalizing those who sell fuel to the island—now demands exorbitant prices. Economist Jorge Piñón from the University of Texas Energy Institute warned in January that if Cuba didn't receive oil within six to eight weeks, it would face a severe crisis. That deadline expired before the conflict began. With crude prices at levels unseen since 2014, alternative supply becomes mathematically impossible for an economy whose real GDP, measured at the informal exchange rate, barely exceeds $1.2 billion.

Without oil, there's no transport. Without transport, food doesn't reach the market. The regime rationed fuel in February: 20 liters per vehicle, paid in foreign currency. The immediate visible result? Fewer trucks, less supply, more scarcity, higher prices.

The second channel is fertilizers. Cuba imports them, relying on Latin American suppliers—Argentina, Brazil, Mexico—who partly source from the Persian Gulf, which accounts for almost a third of the world's nitrogen production. With urea prices skyrocketing from $470 to over $530 per ton in days—and projections of an additional $80-120 if the blockade persists—Latin American farmers supplying Cuba will raise their export prices. What becomes costlier in Buenos Aires or Mexico City arrives even more expensive in Havana, in the few shipments that still make it through.

The third and most direct channel is imported food. Cuba purchased $355 million in foodstuffs from the United States between January and September 2025 alone. Chicken, pork, powdered milk, rice, wheat flour: the Cuban diet depends on imports for over 80%. Each of these products is now more expensive at the source: wheat hit $230 per ton, corn $180, soybeans $440. Ocean freight costs have soared as shipping companies avoid the Strait of Hormuz and the Suez Canal, opting to circumnavigate Africa, adding ten to twenty days—and equivalent costs—to each delivery.

All of this translates into a figure on the price board for the Cuban consumer.

Before and After: A Grim Picture of Rising Costs

Before the Gulf war, prices in Havana's informal markets were already crippling for anyone earning state wages. A 30-egg carton cost between 3,000 and 3,500 CUP—between 45% and 53% of the average monthly salary for a single product. A pound of pork was 1,000-1,300 pesos. A liter of oil was 700-1,000 pesos.

These prices reflected an informal exchange rate of around 430-450 CUP per dollar. With the dollar now at 515 CUP in March 2026—and the commodity shock not yet fully absorbed into the supply chain—the rule is simple: every imported product or one that relies on imported inputs rises in proportion to the peso's devaluation and the cost increase at the source. A pound of chicken that previously cost the equivalent of a dollar now costs between $1.20 and $1.40, but measured in CUP, the increase is even higher because the peso is worth less.

Economist Omar Everleny estimated that the food basket for two people had risen to 41,735 pesos by August 2025. With further devaluation in December and the Gulf war shock impacting prices through March and April, that figure is poised to exceed 55,000-60,000 pesos before the first half of the year ends—compared to an average salary of 6,600 pesos.

The gap is no longer an economic issue that can be managed with monetary policy. It's hunger.

Forecast: Triple-Digit Inflation in 2026

No international body has yet released an inflation forecast for Cuba in 2026 that incorporates the three simultaneous shocks—total energy cutoff, Gulf war, recurring electrical collapse. The war against Iran might trigger a global food crisis affecting all net-importing countries, but nowhere with the intensity felt in Cuba.

Historical analysis allows us to chart a reference frame. In 2021, when the only shock was the currency reform from "Tarea Ordenamiento," real inflation ranged between 174% and 700%, depending on the source and methodology. In 2026, the shock is simultaneously energy, food, and currency-based, on an economy with an even more deteriorated productive capacity than in 2021.

The most optimistic scenario—Strait of Hormuz reopened in April after Trump's ultimatum, oil around $90—suggests an annual real inflation rate of 100-120%. The most likely scenario based on first-quarter data—prolonged blockade, Brent between $110 and $120—implies inflation between 150% and 200%. The collapse scenario, if the 22 countries demanding Hormuz's reopening fail to exert enough pressure and Cuba receives no oil until September, exceeds 250-300%.

In any of these cases, we are talking about hyperinflation by any technical definition of the term.

No Escape Valve

What sets the current crisis apart from the Special Period of the 1990s—when Cuba also abruptly lost its Soviet energy supply, and GDP fell by 35%—is not just the magnitude of the shock. It's the absence of exits.

In the 1990s, the regime launched the 1993-1994 reforms: legalized the dollar, opened agricultural markets, activated tourism. Insufficient measures, but they cushioned the blow. And it found a new patron in Venezuela, which transferred energy resources valued at $63.8 billion to Cuba between 1999 and 2025.

That patron no longer exists. Venezuela is under Washington's control after Maduro's capture. Mexico cut shipments. Russia, a potential alternative, is sanctioned and preoccupied with Ukraine. And Díaz-Canel's regime has shown, in five years of crisis, a preference for political control over reforms that could destabilize it. Firewood and mule-drawn carts have returned to Cuba as transport and cooking means—the most brutal image of where the dictatorship has led the country.

Meanwhile, between 1.4 and 2.7 million Cubans have emigrated since 2019. Those who remain—those who can't or won't leave—look at the agro-market price boards and perform the same calculation that has yielded the same result for years: it's not enough.

The Gulf War didn't create this calculation. It only made it more impossible to close.

Analysis based on data from ONEI, CEPAL, elTOQUE, the University of Texas Energy Institute, and verified sources cited in the text.