Name: How the US-Israel war with Iran hits food, plastics and prices worldwide | The Dip Podcast
Uploaded: 2026-03-31T16:56:48.000Z
Duration: 11 min 4 s
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This conflict is going to have a very, uh, damaging effect on global food security, whether it's in the United States, Europe, or elsewhere.

You will see global food prices rise, and

Adverbs of manner

potentially, in a worst-case scenario, uh, global food become more scarce.

I am worried about a food crisis across the Middle East, uh, from a humanitarian perspective, but

right now I think, uh, Iran and Iraq are the most vulnerable to such a crisis.

The U.S. relies on imports for a significant bit of its fertilizer needs.

It's becoming obvious that it's very hard to diversify in a hurry, so farmers, to say the least, have a problem, especially in the Midwest.

The war has driven up the price of oil, but

that doesn't just mean increasing prices at the pump.

It means, uh, the price of vital chemicals rises too.

And you might not think about chemicals all day;

I mean, it's not what I how I spend my time.

But things like fertilizer are absolutely essential, and when it gets more expensive, your food bills rise.

In fact, chemicals that come from oil are upstream inputs to construction, cars, medicine, clothing, tech, and

And so just look at the prices for different commodities.

So the price of urea and ammonia, which are both very critical inputs into agricultural supply chains, uh, they're up 50% and 20%, respectively, uh, since this war began, uh, last in, in, in early sorry, late February.

And so the U.S., for instance, we rely on urea im urea imports for about 50%, um, of domestic consumption.

And so just with those rising prices, uh, you're going to see a very significant increase in costs.

There's also other costs for agricultural producers that are rising.

Uh, diesel, for instance, is a is a is a modest but significant, uh, driver of agricultural costs.

And so you will see, uh, global food prices rise, and

then there's also a lot of other products that could be affected.

So could you walk us through simply how disruption in the Persian Gulf ends up affecting a plastic bottle or a synthetically, uh, synthetic fabric jacket in Europe?

So, uh, the Persian Gulf and, and Arab states are, are very important for global energy production.

So about 20% of oil production and 20% of liquefied natural gas, or LNG production, uh, must traverse the Strait of Hormuz.

And so if you take and these are very and demand for these products is very inelastic, meaning that if the price of gasoline rises, you're still going to want to drive places.

And so these outages for, for gas for natural gas and for, for oil, um, are, are going to have major impacts on prices.

Uh, but they're also going to impact petrochemicals.

So as you noted, uh, oil oil is used in a lot of different use cases.

So it's used for things like gasoline, uh, diesel, jet fuel, but also petrochemicals.

So petrochemicals are a little bit distinct from, uh, from your typical oil product.

they can be used for things like jeans, uh, they can be used for things like packaging for plant uh, packaging for, for food products, plastics, etc.

And so if there when there's outages in the Middle East, the Middle East is an important provider of those feedstocks for petrochemical plants.

Uh, it's also a very important provider of electricity, uh, for ultimately electricity for many petrochemical plants, especially in East Asia.

So the economies of Japan, Taiwan, South Korea, uh, rely pretty significantly on LNG exports from, uh, from the Persian Gulf, especially from Qatar.

Um, and so Taiwan, for instance, about half of its electricity is from liquefied natural gas or LNG.

And so if Taiwan, for instance, is forced to curtail electricity, uh, because of because of these LNG outages, that will have ripple impacts on, uh, on petrochemical production in these places.

So, um, if, if petrochemical prices rise sharply, or if you see physical shortages, that will impact a wide array of products.

So, um, this oil, um, shock is feeding into all other kinds of petrochemicals as well is essentially what we're taking away from this.

And Janelle, we, we heard from Joe already about urea and ammonia.

We're talking about fertilizer, these, of course, massively important input into, um, the agricultural supply chain, which affects what ends up in the supermarkets and at what prices.

Um, but, uh, you know, America produces a lot of fertilizer, but

So where in the U.S. is the shock hitting hardest?

So as Joe pointed out, the U.S. relies on imports for a significant bit of its fertilizer needs.

And unlike, say, China, that stockpiles fertilizer, the U.S. doesn't really do that.

So basically, the fertilizer is bought and then used.

And the most obvious region in pain here in the U.S.

is the Midwest, in the so-called Corn Belt.

So you have to think of states like Iowa, Illinois, Indiana, Missouri, where the soil is really flat and they're just about to plant and they would need to be applying that fertilizer now.

So corn happens to be a very nitrogen-intensive plant.

So these are obviously challenging times for rural America.

And it's becoming obvious that it's very hard to diversify in a hurry.

So there was talk of bringing over fertilizer from Venezuela, but

similar to its oil industry, there are problems there around kind of the maintenance of infrastructure.

And suffice to say, the conditions for quickly ramping up fertilizer production in Venezuela aren't ideal, whether politically and economically speaking.

So farmers, to say the least, have a problem, especially in the Midwest.

And Joe, um, a third of global urea, um, and a quarter of ammonia come from the Gulf.

Um, some are calling this the fertilizer shock.

Because fertilizer is so vital for food, should we be focusing more on fertilizer prices than just pure oil prices right now?

I think you raise a very important point.

So this will have major impacts across not only, uh, not only oil and gas supply chains, but

And so this crisis also could not come at a worse time because this is in the planting season.

And so because because of that, because of the the cyclicality of planting, uh, if if farmers don't have access to these agricultural inputs, their crop yields could be reduced, um, over time.

And so this could have a very significant impact on food prices downstream.

Uh, I think there's obviously there's major economic implications for this.

So there are different studies suggesting that over 45 million people, uh, will increasingly face food scarcity.

Um, you know, Engels all holds that, uh, as, you know, as income rises, the share of spending on on food is reduced, but

that implies that, you know, people with less means have to spend more money, um, on agricultural goods.

And so this is going to have a major impact on global poverty.

But I would also say that this will have a major geopolitical impact.

This this outage in the Middle East, uh, arithmetically, uh, will just mechanically will increase the leverage of Russia, Belarus, and

Um, so China is not exporting um, China is not exporting ammonia currently.

They're very concerned about domestic food security for now.

Um, but Russia is the world's largest exporter of fertilizer.

Belarus, uh, Russia's very close partner, is a major player in potage markets.

And so if this crisis persists, you will see Russia, Belarus, and

potentially even China, um, having greater, uh, leverage in the agricultural space.

And I think that that could be a new and frankly worrisome development going forward.

The Gulf countries produce the fertilizer, but

they also import most of their food through the same Strait of Hormuz.