How US-Israel War Against Iran Could Trigger Global Food Crisis

Global attention is focused on oil tankers and liquefied natural gas (LNG) vessels that have temporarily disappeared from the Strait of Hormuz due to the war between the United States and Israel against Iran.

One-fifth of the world’s crude oil exports and LNG from Gulf nations destined for around the globe pass through the Strait of Hormuz, a narrow seaway between Iran and Oman. However, there is another cargo that is far more vulnerable: fertiliser.

These fertilisers are vital to global food sources and food imports that keep Gulf Arab nations such as the United Arab Emirates, Qatar, Kuwait, Oman, Bahrain, and Saudi Arabia alive.

Gulf nations contribute approximately 20% of global trade volume in key fertiliser nutrients such as ammonia, phosphate, and sulphur, according to data from maritime intelligence firm Signal Group.

Nearly half of global trade in urea, the most widely used nitrogen fertiliser product in the world, originates from the Gulf region, with Qatar supplying approximately one-tenth of global supply, according to Bloomberg Intelligence.

When QatarEnergy halted production last week following Iran’s attack on Ras Laffan (the world’s largest LNG and fertiliser centre), hundreds of thousands of tonnes of key fertiliser nutrients and their precursor materials came to a standstill.

The cascading effect of the Iran war threatens global food security once again within six years, following the COVID-19 pandemic and after Moscow seized agricultural land and ports that Ukraine used to export its wheat during its 2022 invasion.

Since the latest conflict began, fertiliser prices have risen 10 to 30%, though they remain approximately 40% lower than in the weeks following Russia’s invasion of Ukraine.

Fertiliser shortages affect crop yields

According to UNCTAD, a UN body that helps developing countries integrate into the global economy, approximately 1.33 million tonnes of fertiliser are exported through the Strait of Hormuz each month. Consequently, closure of the strait for just 30 days could be sufficient to trigger shortages and risk of yield reduction for crops such as maize, wheat, and rice that depend on nitrogen.

“High fertiliser prices affect crop choices,” said Joseph Glauber, senior researcher at the International Food Policy Research Institute (IFPRI) based in Washington, in an interview with DW.

“Farmers may choose crops that require less fertiliser compared to crops requiring intensive nitrogen fertiliser, to avoid higher costs.”

Glauber added that farmers, particularly in low-income countries, may reduce overall fertiliser use, which could lower crop production.

Although US President Donald Trump insisted on Monday (9 March) that the US-Israel war with Iran was “almost completely over,” Iran on Wednesday (11 March) fired at three ships in Hormuz. According to the United Kingdom Maritime Trade Operations (UKMTO), this signals that Tehran remains determined to close the strait.

The longer cargo ships are unable to pass through Hormuz, the greater the likelihood of stagnation in the global fertiliser supply chain, according to commodity analysts.

“Prolonged disruptions will significantly tighten fertiliser availability in regions heavily dependent on imports such as Brazil, India, South Asia, and parts of the European Union,” according to research from Dutch bank ING in early March.

Other fertiliser producers such as Russia, China, the United States, and Morocco have limited reserve capacity and will struggle to increase production to fill existing shortages. China has imposed restrictions on phosphate and nitrogen fertiliser exports, but is now “forced” to ease these restrictions.

“Nitrogen can actually be produced by any country that has natural gas or coal, unlike potash or phosphate which depend on mineral reserves for mining,” said Glauber, former senior economist at the US Department of Agriculture.

However, the main issue is high natural gas prices and increased production could make it uneconomical.

Oil prices rise, food costs surge

Beyond fertiliser constraints, the dominant role of oil in determining food costs is very clear, as oil drives everything from agricultural machinery and trucks that transport harvests to processing plants that turn crops into foodstuffs and refrigeration systems. Every stage of food production is now exposed to energy price spikes.

With Brent crude oil remaining high at around $89 (approximately Rp1.5 million) after temporarily surging to $119.50 (approximately Rp2 million), the impact is already being felt with rising fuel prices in several countries. Diesel prices in western America jumped 14% in the last two weeks, whilst German diesel prices rose by a fifth in just a few days.

Fuel prices in Asian countries such as China, Japan, and South Korea, which import much of their oil from Gulf nations, have also risen sharply. The Indian Government has pre-empted high prices by fixing diesel and other fuel prices to protect consumers and the commercial transport sector.

IMF Managing Director Kristalina Georgieva warned in a Bloomberg interview last week that a 10% increase in energy prices lasting one year could add 0.4 percentage points to global inflation and cut up to 0.2% from world economic growth.

“Energy indirectly contributes to 50% of food prices,” Glauber from IFPRI told DW. “After most countries experienced high food inflation rates in 2023/2024, prices have not fallen; they have remained stably high.”

Low-income nations most affected

The humanitarian impact of the US-Israel war with Iran is felt unevenly. Low-income countries and nations dependent on imports bear the heavy burden of dwindling fertiliser supplies and soaring energy prices.

India is among the most vulnerable as it is dependent on Gulf nations with imports of