Beyond Oil: US-Iran Conflict Brings New 'Apocalypse' for the World
Jakarta, CNBC Indonesia — Armed conflict erupting in Iran is beginning to pose serious threats to global food security. This follows disruption to fertiliser distribution routes through the Strait of Hormuz.
Whilst markets have thus far focused on the risks to crude oil supplies, analysts are warning that threats to the fertiliser supply chain are equally dangerous. This could trigger long-term food price inflation that would devastate household economies.
Wolfe Research’s Chief Economist, Stephanie Roth, explained that beyond energy issues, this other risk has received insufficient attention, despite its fatal impacts.
A domino effect could emerge leading to increases in food prices due to fertiliser scarcity, which pushes up agricultural costs. In a note released on Tuesday, Roth provided deep analysis on the situation.
“Beyond energy, another less-noticed risk is the potential domino effect on food prices, as fertiliser scarcity drives agricultural costs higher,” Roth said, as cited by CNBC International on Thursday (12 March 2025).
For the United States specifically, Roth estimates that this disruption could push food price inflation (commonly referred to as food at home) up by 2 percentage points and add approximately 0.15 percentage points to overall inflation, separate from the 0.40 percentage point increase driven by the energy sector.
These price rises loom over consumers who have already struggled with high living costs for food, housing, and energy, with food inflation having risen 2.4% annually in February, according to data from the Bureau of Labour Statistics released on Wednesday.
According to Roth, the timing of this conflict is crucial because fertiliser is applied at the beginning of the planting cycle and determines harvest yields later in the year. Since the conflict broke out late last month, commercial traffic through the route—which carries one-third of global fertiliser—has largely halted.
“If fertiliser supplies tighten during this window, farmers may reduce fertiliser application rates. This could diminish yields for commodities such as maize, soyabeans, wheat, and rice, whilst increasing agricultural costs,” Roth said.
Field Prices Already Rising
In line with this analysis, economists in the fertiliser industry report that field prices have already begun to climb. Data from The Fertiliser Institute shows that between the week ending 27 February and 6 March—which included the start of the conflict—import prices for urea fertiliser per short ton in the US surged dramatically by 30%.
Urea itself is a nitrogen-based fertiliser most widely used to boost harvest yields and is one of the most actively traded fertiliser commodities through the Gulf region. The Fertiliser Institute’s Chief Economist, Veronica Nigh, stated that the high fertiliser prices for farmers and retailers would ultimately be passed on to consumers in the form of higher food prices if trade disruption continues.
“This is a global impact on fertiliser costs. I imagine there will be far more of these cost increases passed through to consumers in this scenario, something we have not seen before,” Nigh said.
Although the United States imports approximately 20% of its total fertiliser requirements from various suppliers including Canada, Trinidad and Tobago, and Russia, the ripple effects of this conflict will still reach the entire world. Asia and Africa are heavily dependent on fertiliser exports from the Gulf region, with countries such as India relying heavily on these supplies, whilst many African nations require imported material from there to produce domestic fertiliser.
Amid threats of crisis for farmers and households, this situation has instead become a windfall for major fertiliser producers. CF Industries’ shares even touched an all-time high on Monday with a rise of nearly 10% in the past week, representing the largest multiday gain for the company since 2022.