The Strait of Hormuz Closure Is Already Hitting Supermarket Prices
By Haley Zaremba - Jul 24, 2026, 6:00 PM CDT
Crop prices just hit a three-year high, indicating major downstream pain soon to come at the supermarket. There are two major factors leading to high crop prices and a potential global food crisis: heat waves and intensifying conflict in the Black Sea threatening to disrupt global grain trades, and volatility in fertilizer markets stemming from the war in Iran and the closure of the Strait of Hormuz.
The International Food Policy Research Institute (IFPRI) is referring to the unfolding situation in fertilizer supply chains as an “input crisis” that could soon develop into a full-blown food crisis, especially in poor countries. Synthetic fertilizer is a petroleum product, and markets for fertilizers and fertilizer components like urea and phosphate are therefore extremely sensitive to oil shocks and supply disruptions. About one-third of the world's urea imports come from the Middle East. Since the Strait of Hormuz closed to shipping traffic earlier this year, 3.9 million tonnes of urea exports, or about 30 percent of the region's annual fertilizer exports, have been effectively blockaded.
Fertilizer prices spiked in the months after the Strait initially closed at the end of February, but had since stabilized. However, prolonged conflict in the region threatens to create sustained volatility in the market as factories cut back on fertilizer production and stockpiles threaten to spoil. “Most production facilities in the region continue to operate at reduced rates to prevent excessive stockpiling,” IFPRI reports. “While urea can generally be stored for several months, high temperatures and moisture can damage its quality. The risk of substantial fertilizer supply shortages is rising as the conflict prolongs and the Strait of Hormuz stays closed.”
In addition to the supply chain disruptions in the Middle East, Ukrainian ports in the Black Sea are now the site of renewed conflict, causing major supply chain disruptions for staple grains. Moreover, Ukraine's exports of corn, barley, wheat, and meslin already remained far lower than their 2020 levels, before Russia's invasion. This deficit has also had a considerable and ongoing impact on global food security, as Ukraine is a major agricultural exporter.
A new United Nations report warns that the effects of rising energy and fertilizer prices, driven by global conflict including the United States and Israel's war in Iran as well as Russia's ongoing war in Ukraine, could result in an additional 9 to 18 million people going hungry around the world. The report found that, on a global level, the average cost of a healthy diet increased by nearly 25 percent between 2021 and now, from 3.44 purchasing power parity (PPP) dollars per person per day to 4.28 PPP. Latin America and the Caribbean face the highest average costs, at a painful 4.91 PPP.
The most recent oil and fertilizer shock emanating out of the Strait of Hormuz hit markets at a vulnerable time, when they are still contending with the fallout of Russia's war in Ukraine and facing mounting pressure from climate change. “We are in a current era where we have the highest number of conflicts and are still increasing,” International Fund for Agricultural Development (IFAD) President Alvaro Lario told the Associated Press earlier this month, adding that “Whenever there is a conflict, also hunger, displacement and refugees increase.”
Solving the problem will require sustained efforts in a time of unprecedented global uncertainty and insecurity. “Ending hunger and making healthy diets affordable requires political commitment, sustained investment and enabling policies,” QU Dongyu, the Director-General of the United Nations Food and Agriculture Organization, was quoted by EuroNews. “Recent crises – from natural disasters like the COVID-19 pandemic to man-made disaster like hotspots of conflicts, the war in Ukraine, the Gaza crisis, and the recent Strait of Hormuz disruption - have demonstrated both the resilience of agrifood systems and the need to strengthen them further to better serve the world's most vulnerable people, farmers and consumers,” Dongyu went on to say.
By Haley Zaremba for Oilprice.com
