- Rising oil prices and shipping disruptions linked to the war are beginning to filter through global food systems, say experts

- ‘There are three main channels of impact – three F’s: fuel, fertilizer and financial markets,’ says Chris Barrett, an agricultural economist at Cornell University

ISTANBUL

The US-Israel war with Iran is beginning to affect more than just energy markets, as economists warn its impact could soon be felt in supermarket prices around the world.

The link is indirect but powerful. As tensions disrupt shipping through the Strait of Hormuz – one of the world’s most important oil routes – higher energy costs are starting to ripple through the global food system.

The waterway carries more than a quarter of global seaborne oil and about one-fifth of total oil consumption. Any disruption quickly raises fuel prices, which in turn affect transport, fertilizer production and food processing.

Analysts say the immediate impact is not a sudden shortage of food, but a gradual rise in costs, especially for products like fresh produce, meat and dairy.

The pressure begins with higher fuel and shipping costs, then spreads to fertilizers and financing. Over time, those increases work their way into retail prices.

Fertilizer prices have already jumped sharply, with the International Food Policy Research Institute (IFPRI) reporting that Middle East urea prices rose by more than $90 per metric ton in one week in early March – a 19% increase – and are now about 40% higher than before the war.

Fuel, fertilizer and finance

Chris Barrett, an agricultural economist at Cornell University, said the impact on food prices will depend largely on how long disruption in the Strait of Hormuz lasts.

“There are three main channels of impact – three F’s: fuel, fertilizer and financial markets,” Barrett said, adding that a possible El Nino event could worsen pressure on food markets in some regions.

The fastest effects are likely to come from fuel.

Higher oil prices raise transport costs, which make up a large share of the final price consumers pay for food. The effect is often strongest in countries far from ports or with weak infrastructure, including parts of sub-Saharan Africa and Central Asia.

Fuel costs also affect food in other ways. They increase the cost of processing and refrigeration, and can make biofuels more attractive, diverting crops like maize and soy away from food markets.

Barrett said financial markets are a third channel. Rising costs across energy and food can push interest rates higher, increase borrowing costs and strengthen the US dollar, making imports more expensive.

“The inflationary effects of fuel, fertilizer and food prices are driving interest rates higher,” he said.

He estimates food prices could rise by about 0.5% to 1% in the US and Canada over the next one to two months, with bigger increases possible in poorer, landlocked countries that rely on imports in Africa, Asia and Latin America.

Regions already vulnerable to climate risks could face added pressure. Southern African countries that depend on maize imports may be hit harder, especially if El Nino affects harvests, while wheat-importing regions in North Africa and West Asia also face risks, Barrett added.

Fertilizer impact may come later

The effect of fertilizer disruptions may take longer to show but could be more significant over time.

The Gulf is a major supplier of key inputs such as urea and ammonia, while natural gas – heavily traded through the region – is essential for producing nitrogen fertilizers.

The UN’s Food and Agriculture Organization (FAO) has said fertilizer production recovered in 2024 and 2025 after earlier disruptions, but warned that energy prices remain a key risk.

Joseph Glauber, a research fellow at IFPRI, said the first effects of a disruption would likely be felt in the Gulf itself, where countries rely heavily on imports of grains, vegetable oils and sugar.

A prolonged blockage would force shipments to reroute through longer and more expensive alternatives such as the Red Sea, Caspian Sea or overland routes.

He said food inflation in the Gulf has remained relatively stable so far, although it has been higher in Iran.

Shipping costs, however, have already climbed to their highest levels in years.

Still, Glauber said the short-term global impact may be limited.

“In the short run, impacts are relatively small,” he said, noting that rising energy costs would gradually push up food prices rather than cause immediate disruption.

Gulf dependence raises concerns

Over time, fertilizer supply is becoming a bigger concern.

Glauber said countries including India, Brazil, Thailand, Bangladesh and Türkiye depend heavily on the Gulf for nitrogen fertilizers. Even large economies like the US and Australia rely on these supplies.

Higher fertilizer costs could reduce farmers’ profits and influence planting decisions. Some may switch to crops like soybeans that require less fertilizer than wheat, rice or corn.

Others may simply use less fertilizer, which could reduce yields.

Even so, global food supplies remain relatively strong for now, helping to cushion the immediate impact.

“For what it’s worth, the futures markets believe oil prices will be in the high $70s at the end of the year,” Glauber said. “If the Strait is opened up soon, I would expect fertilizer and energy prices to fall back to pre-war levels.”

For now, analysts say the biggest risk is not a sudden food crisis, but a steady rise in costs.

If the disruption in the Gulf is short-lived, the impact on food prices may remain limited. But a prolonged conflict could push up costs across transport, fertilizers and processing, feeding through to consumers over time.

Barrett said poorer countries that depend heavily on imports are likely to feel the effects most strongly, while Glauber noted that the duration of the disruption will be key.