Name: Iran War Sends Shockwaves From Energy Markets to Global Food Supply
Uploaded: 2026-03-30T21:40:44.000Z
Duration: 13 min 10 s
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This is a story about the other shoe dropping.

Adverbs of degree

The war in Iran has sent the price of oil and natural gas soaring, putting pressure on just about everyone, from central banks trying to deal with inflation.

The economics effect could be bigger, they could be smaller, they could be much smaller or much bigger.

To people filling their tanks at the gas station.

Before the gas prices went up, I could fill my car up for like $30, $35.

But the Strait of Hormuz isn't just affecting energy prices.

It's also hitting farmers who need fertilizer for the crops they're about to plant.

What's happening to farmers right now is a double whammy at a time when they're very vulnerable.

Our special contributor, Christa Freeland, was among those who spotted the fertilizer problem as soon as the war began.

I am a farmer's daughter, and I'm also a former foreign minister and a former finance minister.

And one of the first things I thought when this war started and when it was clear that Iran was going to be blocking the Strait of Hormuz was, oh no, what's going to happen to the farmers?

Fertilizer accounts for about 25% of the total costs of farmers of row crops such as corn and soybeans.

And since the war with Iran began, prices for nitrogen-based fertilizer have risen dramatically.

We have seen a major impact on global nitrogen phosphate values.

Josh Linville is vice president of fertilizer at financial services firm StoneX.

Of course, as most farmers will tell you, those prices have skyrocketed,

and it's based on the fear of a lack of supply that's out there.

We have seen, because of the shutdown of the Persian Gulf, the global S&D for nitrogen and phosphate as well, which isn't getting as much traction, not as much attention.

We are seeing both of those get extremely tight.

So everybody is talking about the oil and the gas and everything else that flows through there.

Few people know urea, being the most commonly traded nitrogen product of the world, about a third of the world's product flows through that Strait of Hormuz.

When you look at the top 10 list of global urea exporters, three of them sit behind the Strait of Hormuz.

That's Iran, that's Qatar, and that's Saudi Arabia.

Those three nations represent three of the 10 largest anhydrous exporting nations.

And even on the phosphate side, not a lot of people understand this, Saudi Arabia is one of the world's top five exporting nations for phosphate exports around the world.

And again, all of these products are stacked up and backed up,

and production is suffering until the Strait of Hormuz is reopened to safe traffic.

Farmers are very affected by the price of fertilizer.

Fertilizer accounts for about 25% of the costs for a farmer.

And this is happening just at seeding time as they're getting ready to plant their crops.

And it's happening at a time when farmers have been really beaten up.

The trade wars have been really hard for farmers, for American farmers, I should say.

COVID was really, really hard for farmers,

and Russia's invasion of Ukraine and the economic impact was really hard for farmers.

And then on top of that, you see the price of fuel, the price of fertilizer skyrocket at a time when you're just going into your shop, looking at your seed drill, checking that everything works, getting ready to get out in the fields.

farmers' need for fertilizer is so great that they're allowed to import it even from Russia, the largest exporter of nitrogen fertilizers in the world.

But they have nevertheless been hurt by geopolitical events thousands of miles away.

So you've got to be able to move it in a cost-effective manner at scale.

Tom Halverson is CEO of Cobank, which provides financial support to farms, cooperatives, and agribusinesses.

At the same time, rural Americans in general and farmers in particular are not immune from macroeconomic conditions, including inflation, for example.

They are incredibly exposed to trade, buying and selling internationally.

Producers have been squeezed quite dramatically over the last 12, 18, 24 months by a combination of lower commodity prices for what they sell on the one hand and significantly higher prices for the inputs, be it fertilizer, seeds, chemicals, and

And therefore, economic conditions are tougher than they have been until you go back to the 2018, 2019 period when we had our first trade conflict in general, but

particularly the one we had with the Chinese.

And when the costs go up for farmers, the price of food cannot be far behind, with all that means for inflation.

Higher fuel prices automatically translate into higher food prices.

Higher fertilizer prices automatically translate into higher food prices.

And the thing that I think is especially challenging about that is the geopolitical and the political consequences.

A lesson that I think I really learned during COVID and during the inflationary aftermath of COVID was what a huge and unpredictable political impact the price of food can have.

The people who are hurt the most are the most vulnerable, the people who are the most vulnerable in the world,

and that is the global South, and the people who are the most vulnerable in our own countries.

So that means, in the United States, people for whom food is a really big part of their budget.

and Iran began on February 28th, we've already seen the consequences start to reverberate around the world.

Just a week into the war, the price of urea rose by 19%.

And with each day, those consequences spread and grow.

In the way that we've looked at it from a supply standpoint, we woke up Saturday morning to the news that this attack had happened.

From that point on, we knew vessel traffic was going to stop because you've got to wait until safe passage.

The shipowners weren't going to put their crew and their vessel at harm's way.

And so we knew that if this lasted several days, we were going to have a shipment problem.

But we could solve that in relative short order if we kept it to, say, three to five days.

After we moved past that period, now we started to wonder, okay, we're losing some of the most important shipment times of the entire year from this situation.

And we had to start worrying about what's the impact on production because storage is finite in that part of the world.

We started to see oil and gas production go down.

We started to see nitrogen production go down because it had nowhere else to go with these tons until the vessels started to move again.

and we're starting to see the tentacles of the story start reaching out to other parts of the world.

And what I mean by that, it is no longer just a nitrogen phosphate Persian Gulf Strait of Hormuz story.

A lot of the world's natural gas flows to the Strait of Hormuz.

India, for example, is the world's second largest producer of urea.

A lot of their gas input for their domestic nitrogen production facilities comes from the Middle East.

Their production rates are falling drastically because they don't have the input to produce that finished good.

In fact, you're hearing stories about cooking gas being hard to come by and prices skyrocketing as they are.

So you're seeing major global manufacturers starting to be impacted.

Linville says that even if the war were to end immediately, there would be a delay in getting fertilizer to the people who need it, like U.S.

And that delay comes at a critical moment.

Our single biggest month for urea imports is the month of April.

And you might be thinking, well, that's okay.

But vessels don't just show up overnight.

If somebody snaps a finger, they get a wish,

and everything is done, we can start loading vessels immediately.

And the very first vessel is going to point to the U.S. market.

It's going to take a couple of days to fill that vessel and get it pushed back out to sea.

And it's going to take about 30 days in total between loading and arriving to a U.S. shore.