The Iran War’s Agriculture Shock Isn’t Over Yet
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Traffic at the Strait of Hormuz largely remains stuck in the wake of the cease-fire deal between the United States and Iran, underscoring just how complicated it will be to restart the crucial energy and trade flows that power global agriculture.
For more than a month, the Iran war and effective closure of the Strait of Hormuz—a vital maritime choke point—have sent shockwaves through the energy and agricultural sectors, as the conflict has scrambled both the production and export of key commodities. Prices of urea, a fertilizer, have skyrocketed by as much as 40 percent, while energy costs have soared around the world, forcing dozens of governments to take emergency measures to stave off fuel shortages and help consumers bear the higher costs.
Traffic at the Strait of Hormuz largely remains stuck in the wake of the cease-fire deal between the United States and Iran, underscoring just how complicated it will be to restart the crucial energy and trade flows that power global agriculture.
For more than a month, the Iran war and effective closure of the Strait of Hormuz—a vital maritime choke point—have sent shockwaves through the energy and agricultural sectors, as the conflict has scrambled both the production and export of key commodities. Prices of urea, a fertilizer, have skyrocketed by as much as 40 percent, while energy costs have soared around the world, forcing dozens of governments to take emergency measures to stave off fuel shortages and help consumers bear the higher costs.
Even with a tentative cease-fire in place, nearly all of those challenges still remain up in the air. “It doesn’t resolve any of the uncertainty over when we will get back to regular, reliable, low-risk trade and manageable fuel and fertilizer prices,” said Christopher Barrett, an agricultural economist at Cornell University.
One of the biggest uncertainties is control of the Strait of Hormuz. It remains unclear what exactly the United States and Iran have agreed to over the strategic waterway, with both sides offering, at various points, conflicting terms and conditions.
After the cease-fire was announced, Sultan Ahmed Al Jaber, the head of the Abu Dhabi National Oil Company, declared in a LinkedIn post that the strait is “not open” and that “access is being restricted, conditioned and controlled.”
U.S. President Donald Trump has lashed out at Tehran in multiple social media posts, in a sign that things are not going to plan ahead of high-stakes negotiations this weekend. “Iran is doing a very poor job, dishonorable some would say, of allowing Oil to go through the Strait of Hormuz. That is not the agreement we have!” he said in a post on Truth Social.
The back and forth has done little to reassure firms. “Shipping companies and shippers are waiting for more clarity from the U.S. and from Iran about what exactly they agreed to,” said Caitlin Welsh, the director of the Global Food and Water Security Program at the Center for Strategic and International Studies, a Washington-based think tank.
With key energy infrastructure damaged and confusion shrouding the Strait of Hormuz, experts warn that a prolonged energy squeeze will only continue to throttle the agricultural sector. And analysts aren’t betting on immediate relief.
Wood Mackenzie, a global research firm, estimates that even with a two-week cease-fire in place, it will take months to get Middle East energy production back to normal, and the U.S. Energy Information Administration has warned that fuel prices could continue a monthslong rise even after the opening of the Strait of Hormuz.
All that spells trouble for global agriculture, which depends on energy for everything from transportation fuel to the natural gas that serves as a feedstock to fertilizers.
“There’s a lot of energy embodied in food at almost every stage of processing and transportation to get it from the farm to retail,” said Joseph Glauber, a former chief economist at the U.S. Department of Agriculture who is now at the International Food Policy Research Institute (IFPRI).
Take diesel, which powers larger equipment, such as farm machinery and the trucks that transport food from warehouses to grocery stores. Diesel prices have spiked due to the war, and Glauber said that farmers are seeing higher energy and fertilizer costs at a time when many agricultural prices are low—further cutting into their margins.
And the pain likely won’t be limited to farmers, either. “Everything we buy more or less moves on a truck or a train once it comes in from the coast, and so the inflationary consequences of rising diesel prices are far-reaching,” said Kevin Book, the managing director of ClearView Energy Partners, a consultancy.
From Ireland to India, the war’s economic shock is already rippling across farm communities worldwide. Farmers took to the streets in Ireland this week to protest fuel prices, while surging fertilizer costs have reportedly roiled farmers across the United Kingdom. Egypt has capped the price of unsubsidized bread loaves in order to shield consumers from higher prices, and in Vietnam—the world’s second-biggest rice exporter—higher costs and shipping delays have disrupted rice farming.
Ahead of local elections, the Indian government this week raised its fertilizer subsidy for farmers, in an attempt to help insulate the group from surging global prices.
“The welfare of our farmer brothers and sisters has always remained a top priority for our government,” Indian Prime Minister Narendra Modi said in a post on X. “This will ensure that our food providers continue to receive fertilizers at affordable rates as before.”
On Wednesday, after Trump announced the two-week cease-fire deal, the World Bank, International Monetary Fund (IMF), and U.N. World Food Programme issued a joint statement warning that the Iran war’s economic impacts would strain communities worldwide.
“Sharp increases in oil, gas, and fertilizer prices, together with transport bottlenecks, will inevitably lead to rising food prices and food insecurity,” the statement said. IMF Chief Kristalina Georgieva added on Thursday that 45 million people are at risk of being pushed into hunger, bringing the global total to more than 360 million.
Barrett, the Cornell economist, said that landlocked, maize-dependent countries in sub-Saharan Africa could be the hardest hit by the war’s repercussions. “Corn prices will rise quickly over the next couple of months if this cease-fire doesn’t turn permanent,” he said.
It may not just be the war, either; upcoming climate events could further complicate the global food security outlook. The European Centre for Medium-Range Weather Forecasts has forecasted a likely super El Niño weather pattern this year, which occurs when sea-surface temperatures in the Pacific Ocean reach 2 degrees Celsius above average. That could unleash far-reaching agricultural impacts.
“If we face a climate shock in addition to this world price shock, then I think we could start to see real concerns for food insecurity later on in the year,” James Thurlow, the director of foresight and policy modeling at IFPRI, said at a press briefing on Friday.
This post is part of FP’s ongoing coverage. Read more here.
Christina Lu is a staff writer at Foreign Policy. Bluesky: @christinalu.bsky.social X: @christinafei
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Even if the cease-fire holds, it will take months to undo the damage.
Prices won’t just be higher at the pump.