Escalating hostilities involving Iran and the de facto shutdown of the Strait of Hormuz are rapidly repricing risk across shipping, insurance and energy, lifting delivered grain costs, tightening fertilizer availability and raising food-security concerns in import-dependent markets across the Gulf and beyond.

The global agricultural landscape, already strained by years of geopolitical volatility, has entered a new phase of uncertainty. After the U.S.-Israeli strikes on Iran and Tehran’s move to restrict passage through the Strait of Hormuz an artery that handles about 20% of the world’s oil shipping, insurance and input markets reacted immediately. Bulk carriers and container vessels slowed or rerouted, war-risk cover tightened, and traders flagged mounting friction in grain procurement alongside rising nitrogen risks ahead of spring planting.

WHY HORMUZ MATTERS FOR AGRICULTURE

Hormuz is best known as an energy chokepoint handling about 20% of global oil flows but the agricultural transmission mechanism is fast: higher energy lifts bunker fuel and freight, while disrupted Gulf logistics and war-risk premiums inflate CFR/CIF grain prices even when futures benchmarks are stable.

With vessels avoiding the Gulf or waiting offshore, the supply chain impact is becoming measurable. Clarksons Research estimates about 3,200 ships (around 4% of global ship tonnage) are idle inside the Persian Gulf, while roughly 500 ships (about 1% of global tonnage) are waiting outside the Gulf near UAE and Oman ports.

INSURANCE AND FREIGHT: THE FASTEST TRANSMISSION INTO GRAIN PRICES

For grain buyers, the immediate issue is not a lack of wheat or corn at origin, but the sudden surge in “cost to deliver.” War-risk pricing has moved quickly, widening bid-ask spreads and shortening offer validity as traders wait for freight and insurance signals to stabilize.

Shipping and airspace disruptions are compounding costs. Longer diversions around the Cape of Good Hope can add 10–14 days and roughly $1 million in extra fuel per ship, according to supply-chain estimates.

ENERGY VOLATILITY IS RAISING THE ENTIRE COST BASE

The Hormuz shock has pushed energy prices higher and increased volatility. Brent jumped more than 5% to nearly $77/barrel, while U.S. diesel futures topped $3/gallon for the first time since November 2023 moves that translate directly into more expensive ocean freight and inland logistics for grains and oilseeds.

GRAIN IMPORTS UNDER PRESSURE

The food-security risk is most acute for import-dependent Gulf markets and for Iran, where supply chains are already strained. Financial Times, citing Kpler, estimates the Gulf imported about 30 million tonnes of grain last year, including roughly 14 million tonnes destined for Iran, much of it typically transiting Hormuz.

Kpler also estimates that Saudi Arabia imports about 40% of its grains and oilseeds through its eastern Gulf ports, while the UAE brings in about 90% of those commodities through Jebel Ali. Jebel Ali also functions as a containerised food and perishables hub serving at least four countries (UAE, Saudi Arabia, Bahrain and Qatar), supporting a combined population of roughly 45–50 million people.

On the Iranian side, analysts warn that “pretty much all” of the country’s corn and large volumes of soybeans and wheat arrive via Hormuz, making prolonged disruption especially dangerous for feed and cooking-oil supply chains.

Iran has also moved to conserve domestic supply, banning exports of food and agricultural products “until further notice,” while officials urged citizens to avoid panic buying and pointed to flour distribution measures and strategic wheat stocks.

PORT AND LINER DISRUPTION

Operational disruptions at DP World’s Jebel Ali—a critical global transshipment and distribution hub—have escalated the logistics squeeze for containerised food and inputs. Several major liners were reported to be feeling the disruption, and MSC announced it was halting bookings for freight loaded or discharged in the Middle East following the closure of the port, underscoring how quickly the crisis is spilling from security risk into practical execution constraints.

Clarksons data cited in the notes also indicates the Middle East accounted for about 9.8% of global container lifts in 2025, highlighting the region’s role in global flows and the potential for ripple effects if closures persist.

FERTILIZER SUPPLY RISKS

Beyond freight, the most consequential agricultural risk may be fertilizer—especially nitrogen—because it can alter planting economics and yield outcomes in the next cycle. Qatar supplies about 11% of global urea exports, and the Middle East ships around 20 million tonnes per year—about 35% of global seaborne urea trade—with Iran accounting for roughly a quarter of that regional supply.

Hormuz accounts for roughly 25% of globally traded nitrogen fertilizer, and nearly 45% of global urea shipments are linked to Persian Gulf facilities more broadly.

Prices have reacted quickly. In New Orleans (NOLA), April urea barge values were cited moving from about $457/ton to around $550/ton, illustrating how rapidly energy and logistics risk can reprice agricultural inputs.

Timing is particularly sensitive: the shock hits at the start of Northern Hemisphere spring planting, raising the risk that higher diesel and nitrogen costs could influence acreage decisions, potentially shifting some area from corn to soybeans if nitrogen supplies do not arrive in time.

 MARKET INSTABILITY TRIGGERS STOCK REVIEWS

Hesham Soliman, President of Mediterranean Star for Trading (Egypt), told Miller Magazine that the market has become “not stable” since the start of the conflict, with governments reassessing supply positions. “Every country now is reviewing the stocks,” he said, adding that Saudi Arabia is preparing “for a huge tender,” even as commodity and freight prices begin to move higher.

Soliman said a sustained Hormuz closure would likely tighten oil supply to multiple countries and lift energy prices, which would spill into commodities—“especially the freight.” He also pointed to energy-market knock-on effects in the region, noting that one result of the conflict is that “Israel stop supplying Egypt with gas.”

If the conflict drags on, Soliman warned that “insurance premiums and the freight and the currency as well as the commodities prices will rise dramatically,” raising the risk of a broader cost-of-living shock for import-dependent economies.

WHAT TO WATCH NEXT

Market participants are watching three immediate indicators that will determine how far the shock transmits into grains and food inflation:

• War-risk coverage and pricing for Gulf-linked voyages and how quickly insurers restore workable terms
• Freight and congestion signals (vessel queues, diversions, port suspensions), including the persistence of Gulf and Red Sea rerouting
• Nitrogen markets (urea/ammonia price direction and availability) as importers compete for non-Gulf supply and the planting window advances

With food-import dependence high across the Gulf and fertilizer risk rising just as planting decisions are being locked in, prolonged disruption at Hormuz would keep volatility elevated across freight, inputs and delivered grain prices, amplifying food-security pressures in the most exposed markets.