Iran-Gulf War Threatens to Trigger Global Food Supply Shock

Five weeks into the war between the United States, Israel, and Iran, the conflict's most consequential front may not be measured in missiles or military casualties — but in missing fertilizer shipments, rising grain futures, and the planting decisions of farmers from Iowa to India. The effective closure of the Strait of Hormuz, through which roughly one-third of globally traded fertilizer normally passes, has created a supply shock that is rippling through food systems worldwide [1][7].

The question is no longer whether food prices will rise. They already have. The question is how high, for how long, and who will go hungry as a result.

What Passes Through the Strait — And What No Longer Does

The Strait of Hormuz, a 21-mile-wide waterway between Iran and Oman, has long been recognized as the world's most important energy chokepoint. But its role in global food systems has received far less attention. Before the conflict began on February 28, 2026, approximately 27% of global oil exports, 20% of liquefied natural gas, and 20–30% of internationally traded fertilizers transited the strait daily [1][7].

The fertilizer numbers are where the food crisis begins. The Arabian Gulf accounts for at least 46% of global urea trade — urea being the world's most widely used nitrogen fertilizer — along with 35% of global urea exports, roughly 30% of ammonia exports, and 45% of global sulfur trade [2][7]. The five Hormuz-dependent Gulf states together supply approximately $13.5 billion worth of fertilizer exports to 43 countries [2].

Since the IRGC issued warnings prohibiting vessel passage and drone and rocket strikes on tankers made transit effectively impossible, shipping through the strait has declined by more than 70% [1]. As of early March, zero commercial vessels had transited the waterway in a 72-hour window [12]. Maritime insurers have cancelled war risk coverage for ships in the region, and the U.S. Development Finance Corporation's $20 billion reinsurance facility has been deemed insufficient to offset the risk for shipping companies [7].

The FAO estimates that 3–4 million tonnes of fertilizer trade per month have been stalled by production cuts and shipping constraints [10].

The Fertilizer Price Shock

The price data tells the story in stark terms. U.S. Gulf urea prices surged 32% in the first week of the conflict alone, jumping from $516 to $683 per metric ton between February 27 and March 5 [7]. One advisory firm tracked a 77% increase from mid-December 2025 to March 9, 2026 [7]. Southeast Asian granular urea prices have risen over 40% since hostilities began [7]. Nitrogen and phosphate fertilizers broadly have increased 20–40% [6].

Source: CSIS / IFPRI compiled market data

Data as of Mar 11, 2026CSV

These are not abstract commodity market fluctuations. Fertilizer costs represent 30–40% of a farmer's total operating expenses [12]. When nitrogen fertilizer becomes scarce or unaffordable during planting season — which is exactly when the disruption hit the Northern Hemisphere — the effects cascade through the entire food chain.

The USDA's March Prospective Planting report projected that U.S. corn and wheat acreage, both nitrogen-fertilizer-intensive crops, will each fall 3% relative to 2025. Soybean acreage, which requires less nitrogen input, is estimated to rise by 4% as farmers substitute [10]. This shift has implications well beyond the American Midwest: corn is the primary feedstock for U.S. beef, poultry, and dairy production, and reduced yields would push up meat and dairy prices into 2027 [1].

Iran's Role: Bigger Than Most Realize

Iran's significance in global fertilizer markets has been consistently underestimated in public discourse. The country has a urea production capacity of approximately 6.5–7 million metric tons annually, with export volumes ranging from 5 to 5.5 million metric tons per year [3]. The International Fertilizer Association estimates that Iran is the largest urea exporter in the Gulf region and among the top global suppliers [3].

Iran's production advantage rests on its abundant, low-cost natural gas feedstock, which makes its ammonia-to-urea conversion process among the cheapest in the world — far more competitive than coal-based producers like China [3]. Iranian urea flows to India through government tenders, to Southeast Asia (Vietnam, Sri Lanka, Thailand), across West Africa (Nigeria, Ghana, Togo), East Africa (Kenya, Tanzania), and North Africa [3].

If Iranian exports were halted for six months, global urea supply would fall by an estimated 2.5–2.75 million metric tons. Combined with the broader Gulf disruption, the total shortfall could reach 18–24 million metric tons over that period [10][3]. The crops most affected would be wheat and corn in their spring application windows, with rice paddies in South and Southeast Asia facing the next wave of impact as monsoon planting season approaches in June [6][10].

Who Goes Hungry

The World Food Programme projects that 45 million additional people could fall into acute food insecurity if the conflict continues through mid-2026 and oil prices remain above $100 per barrel [13]. Added to the 318 million people already facing acute hunger globally, this would bring the total to approximately 363 million — surpassing the 349 million recorded during the peak of the Ukraine war shock in 2022 [13].

Source: World Food Programme

Data as of Mar 17, 2026CSV

The regional breakdown is uneven. East and Southern Africa faces the largest absolute increase at 17.7 million additional people, followed by West and Central Africa at 10.4 million, Asia at 9.1 million, the Middle East and North Africa at 5.2 million, and Latin America at 2.2 million [13].

The vulnerability is driven by a structural asymmetry in how much different populations spend on food. In low-income countries, food accounts for approximately 36% of total household consumption. In emerging market economies, the figure is 20%. In advanced economies, it is 9% [14]. A 20–40% increase in staple food prices is an inconvenience for a household in Berlin or Tokyo. For a family in Mogadishu or Dhaka, it can mean the difference between eating and not eating.

Source: IMF

Data as of Mar 30, 2026CSV

Sudan, which imports roughly 80% of its wheat, is among the most exposed countries [13]. Somalia has already seen essential commodity prices rise at least 20% since the conflict began [13]. Yemen and Sudan both import significant shares of their food from the UAE, creating a direct dependency on Gulf shipping routes that are now largely non-functional [5].

The Gulf States: Strategic Reserves Under Stress

The Gulf Cooperation Council states themselves — despite being the epicenter of the disruption — have built substantial buffers. Most GCC countries maintain strategic food reserves covering four to six months of consumption for staple goods [16]. Qatar's Hamad Port Food Security Terminal has 51 climate-controlled silos with capacity to cover two years of national demand for rice, oil, and sugar [16]. Saudi Arabia purchased approximately 794,000 tons of wheat in an international tender in March 2026, following a 907,000-ton purchase in January [16].

But these reserves have limits. Fresh produce cannot be stockpiled, and prolonged closure would stretch overland and Red Sea alternative routes beyond their capacity [16]. The Gulf states import 80–90% of their food overall, including 77% of rice, 89% of corn, 95% of soybeans, and 91% of vegetable oils [5]. Iran itself, with 93 million people, has seen its own food supply chains severely disrupted, and IFPRI projects a major wheat yield deficit for the upcoming summer harvest due to the shortage of top-dressing fertilizers during the critical winter wheat growth phase [1].

Historical Precedent: The Tanker War and the Suez Closure

The current disruption has two imperfect historical parallels. During the "Tanker War" phase of the Iran-Iraq conflict (1984–1988), both nations targeted oil tankers and merchant vessels in the Persian Gulf, triggering international panic, worldwide oil price increases, and heightened U.S. and U.K. naval patrols [17]. But the Tanker War never fully closed the strait — it increased risk premiums and insurance costs while traffic continued at reduced levels.

The closer analogy may be the Suez Canal closure of 1967–1975. When Egypt sealed the canal during the Six-Day War, the weighted average distance of oil shipments from the Persian Gulf to Europe more than doubled, from 4,900 miles to 11,200 miles [17]. The closure lasted eight years and permanently reshaped shipping patterns.

The current Hormuz disruption is qualitatively different from either precedent. Unlike the Tanker War, commercial shipping has effectively halted. Unlike the Suez closure, the goods affected include fertilizers critical to food production, not just energy. And the disruption arrives at a moment when global food systems were already under stress from La Niña-driven drought in southern Brazil and Argentina, below-average rainfall in East Africa, and flooding risks in Southeast Asia [6].

Who Benefits

Every supply shock creates winners. North American fertilizer producers — insulated from the Gulf disruption and sitting on abundant domestic natural gas — are the clearest beneficiaries. CF Industries, the largest U.S. nitrogen producer, has seen its stock respond favorably as analysts project it will capture significant margins while Gulf competitors remain sidelined [12]. Nutrien and The Mosaic Company are ramping up potash and phosphate output to fill the supply gap [12].

Wheat futures surged 3% to near a two-year peak in the first full trading week of the war. Palm oil recorded its most significant single-day price jump since the 2022 commodity shock. Corn and soybeans posted substantial gains [12].

The downstream picture is less favorable. Archer-Daniels-Midland and Bunge Global face compressed margins as input costs rise faster than they can adjust downstream prices [12]. Tyson Foods faces what analysts have described as a "dire" outlook due to rising corn feed costs [12]. The large commodity trading houses — Cargill, Louis Dreyfus, Viterra, and COFCO — occupy an ambiguous position, profiting from volatility and price spreads while managing physical supply chain disruptions.

Non-Gulf grain exporters, particularly the United States, Canada, Australia, and Argentina, stand to gain from any shift in global purchasing patterns as buyers seek to diversify away from Gulf-dependent supply chains. Eastern European fertilizer producers, particularly in Belarus and Russia, could see increased demand if sanctions regimes permit.

The Case That the Crisis Is Overstated

Not all analysts share the most alarming projections. Several arguments support a more measured assessment.

First, the Strait of Hormuz is primarily an energy and fertilizer chokepoint, not a grain corridor. The Persian Gulf region does not export significant quantities of grain. The 2–7.5% increases in corn, wheat, soybean, and soybean oil prices in the first weeks of the conflict, while meaningful, are far below the 20–40% spikes that would trigger a famine-scale emergency [7][12].

Second, Brazil — the world's largest fertilizer importer at 49.11 million metric tons in 2025 — has stated that it is "well positioned to weather short-term disruptions" [7]. Brazilian officials have pointed to diversified supply sources and existing inventory as buffers.

Third, alternative routes exist. Major container carriers including Maersk, CMA CGM, MSC, COSCO, Hapag-Lloyd, ONE, and OOCL have begun rerouting ships around the Cape of Good Hope [8]. While this adds over $1 million in fuel costs per voyage and up to three weeks of transit time, it does maintain physical connectivity for non-Gulf origin shipments [8].

Fourth, China has the option to extend its phosphate fertilizer export restrictions, which are set to expire in August 2026, to protect domestic supply — but it could also choose to release stockpiles onto global markets if prices rise high enough to make it economically attractive [7].

However, the optimistic case rests on the assumption that the disruption remains limited in duration. The FAO has warned of a three-month window before "risks escalate significantly, affecting global planting decisions for 2026 and beyond" [6]. Alternative routes around the Cape of Good Hope lack the infrastructure to handle the 20 million daily barrels of oil and proportional fertilizer volumes that normally transit Hormuz [7]. And rerouting does nothing for Gulf-origin fertilizer that cannot leave Gulf ports in the first place.

Financial Buffers and Their Limits

Source: BLS / Bureau of Labor Statistics

Data as of Feb 1, 2026CSV

The U.S. Consumer Price Index for food stood at 346.6 in February 2026, up 3.1% year over year — and that figure captures only the earliest days of the disruption [15]. The full impact on consumer food prices will not register in official statistics for months.

The financial architecture for managing commodity shocks includes several layers. The U.S. Development Finance Corporation has established a reinsurance facility covering potential losses up to $20 billion [7]. The IMF has indicated it will provide a "fuller assessment" of emergency financial support needs in its World Economic Outlook and Fiscal Monitor reports scheduled for mid-April 2026 [14]. Commodity futures markets continue to function as price discovery and hedging mechanisms, though volatility has increased substantially.

But the U.S. lacks strategic fertilizer reserves — unlike its Strategic Petroleum Reserve — leaving domestic markets exposed to import disruptions [7]. The Department of Justice has opened an investigation into major fertilizer producers for potential price-fixing, suggesting concerns about market manipulation layered on top of genuine supply constraints [7]. For import-dependent developing countries, the primary buffers are IMF emergency credit lines and World Bank food security facilities, which were already stretched by the successive shocks of COVID-19, the Ukraine war, and ongoing climate disruptions.

The Convergence Problem

What makes the current moment distinct is not any single factor but the convergence. A major maritime chokepoint closure. A fertilizer supply shock hitting during peak Northern Hemisphere planting season. An ongoing La Niña cycle stressing crop production in South America and East Africa. A global food system that was already feeding 318 million acutely hungry people before the first missile struck [6][13].

"Without fertilizers today, we might have hunger tomorrow," UN Secretary-General António Guterres said in March [6]. The statement captures the lag effect that makes this crisis so difficult to manage politically: the decisions that determine whether 2027 is a year of adequate harvests or widespread shortages are being made right now, in fields and ports and commodity trading desks around the world, under conditions of radical uncertainty.

The war may end in weeks or drag on for years. The fertilizer that does not reach farms this spring will not produce food this fall. That arithmetic does not change with a ceasefire.