In an assessment for Miller Magazine, IGC Executive Director Arnaud Petit clarifies that while tensions around the Strait of Hormuz have heightened concerns over energy, freight and fertilizer markets, the disruption does not mirror the systemic grain supply shock seen in the Black Sea. Petit notes that although Hormuz represents a relatively small share of global grain trade, a prolonged closure would pose a direct threat to import-dependent Gulf economies, where limited logistical alternatives and rising cost pressures can quickly become a food security challenge.

Arnaud Petit
Executive Director of the
International Grains Council (IGC)

Arnaud Petit, Executive Director of the International Grains Council (IGC), has provided Miller Magazine with a comprehensive assessment of the de facto blockade of the Strait of Hormuz. Petit emphasized that the crisis possesses a different dynamic than the disruptions in the Black Sea or the Red Sea, sharing critical technical data on the relationship between freight costs, energy, and food security.

Petit quantified the weight of Hormuz in the grain world with specific figures: "In a global perspective, around 20 million tons (Mt) of grains and oilseeds go through the Strait of Hormuz every year. It is worth noting that the IGC forecast for grains and oilseeds imports in 25/26 is pegged at 38 Mt for all routes. While this amount is significant, it still represents less than 5% of the global trade of grains."

He noted that the sharp year-on-year increase in 25/26 is primarily linked to higher maize and wheat imports, particularly by Iran. However, he added a critical warning: "The blockade of the Strait of Hormuz is nothing relating to the disruption in the Black Sea or the Red Sea crossing. Nevertheless, we must bear in mind that countries in this region rely heavily on grain imports from the sea and have limited alternatives to get grains into their domestic markets. A long blockade might pose a severe challenge to their food security and the affordability of food."

THREE MAIN DRIVERS OF THE SHOCKWAVE

While stating it is still too early to fully assess the impact of the shockwave, Petit identified three main drivers that will dictate market direction:

• The Oil-Freight Nexus: "Oil market movements will have a direct impact on freight rates. We assess that around 20% of the total cost of the freight rate is directly linked to the price of oil. Therefore, all routes will be affected by the recent surge in oil prices. The longest routes from North or South America to Asia will be the most impacted."
• Gas Markets and Nitrogen Productivity: "The blockade is also impacting the gas market, an essential component of nitrogen fertilizer. Even if the majority of fertilizer has already been purchased in the Northern Hemisphere, this development can impact the price of nitrogen fertilizer—a direct component of productivity for wheat and maize."
• The Insurance Barrier: "The absence of shipping insurance in a war zone can simply prohibit any journey, as vessel owners would not take such a level of risk. This impact will be mainly local."

Beyond these three logistical and production drivers, Petit highlighted a secondary but dangerous financial transmission channel: currency volatility. "The currency exchange in several developing countries has been affected, losing ground against the dollar," Petit warned. He noted that this development needs to be monitored closely, as several countries, particularly in Southeast Asia, could see their purchasing power for essential grains eroded by the strengthening dollar.

LIMITED ALTERNATIVES FOR MOST GULF IMPORTERS

He also shared a significant observation regarding recent trade flows: "We have noticed a higher volume of grains crossing the Strait of Hormuz in January and February this year compared to last year—more or less double the usual amount."

NO PANIC, BUT CAUTION

The most urgent part of Petit’s analysis concerns Iraq and regional stock management. He warned that time is a luxury some do not have: "The majority of countries in the region have strong food security policies with strategic stocks in case the disruption lasts several months. However, a country such as Iraq might quickly enter a critical situation, as the next harvest will only occur in May–June. Therefore, the reopening of the Strait of Hormuz would be immediately beneficial to the countries facing food insecurity in the region."

Finally, Petit noted that the port of Jebel Ali in the UAE serves as a relevant hub for supplying containerized grains and pulses to South Asia. He warned that this disruption must be followed closely as the Indian import season for pulses is near its start.