The Strait of Hormuz handles 20 million barrels of oil daily, with no global excess capacity to fill the gap, according to Simon Johnson. Oil prices surged from less than $70 a barrel on February 27 to nearly $120 after the effective shutdown on February 28, later settling closer to $90, with gasoline prices rising globally. According to multiple reports, oil prices spiked at $119.50 per barrel on March 9, 2026, with later falls as G7 countries discussed releasing emergency reserves. U.S. gasoline prices increased to $3.48 a gallon from under $3 a week ago, according to AAA. The closure also affects international fertilizer trade, as five countries—Iran, Saudi Arabia, Qatar, the UAE, and Bahrain—account for about a third of globally traded urea via the strait, and these countries have exported $50 billion worth of nitrogen fertilizers since 2020, with the U.S. importing $5 billion. Fertilizer prices have risen dramatically in recent years, with recent spikes linked to the closure, disrupting a key fertilizer trade route.
Fertilizer production and trade disruption are linked to global food security concerns. Many fertilizers used in grain production are manufactured in Gulf states as a byproduct of natural gas extraction, according to an official source. The Middle East accounts for 35% of global urea trade and 20% of phosphate trade from Saudi Arabia, multiple reports indicate. Fertilizer prices have nearly doubled since the shipping channel closed, with nitrogen prices rising from $470 to $600 per short ton between late February and early March. Natural gas prices, which make up 60-80% of nitrogen fertilizer production costs, have risen, contributing to fertilizer price increases, according to multiple reports. In Sweden, fertilizer prices are rising due to higher natural gas prices, potentially affecting food prices, with natural gas prices increasing from about €30 to €50 per megawatt-hour. In Finland, fertilizer price increases may affect food and fuel prices, but a researcher does not predict a repeat of 2022's sharp price hikes, depending on the war's duration. Urea production relies on natural gas, and closure has delayed exports of LNG, ammonia, and urea, with Qatar Energy halting production at the world's largest urea plant after a missile attack on its LNG facilities.
In the U.S., agriculture faces rising costs, squeezed margins, and policy responses. The U.S. imports about 25% of its total fertilizer use, including 18% of nitrogen, multiple reports indicate. Fertilizer can account for 20% of production expenses for corn in the U.S. Farmers in the U.S. and UK are struggling with profitability due to high fertilizer and fuel costs, with some reporting no profit and unsustainable conditions, according to multiple reports. U.S. farmers face margin squeezes and disruption to agricultural export markets from China's retaliation against U.S. tariffs. USDA forecasts a fall in U.S. farm income this year despite $44.3 billion in direct payment support in 2026.
European farmers are confronting a profitability crisis amid rising input costs. The conflict has led to higher fuel prices, including red diesel in the UK, with increases of roughly 50%, multiple reports indicate. According to multiple reports, in Sweden, farmers' costs for fertilizer rose nearly 4% from January 2025 to January 2026, while they received 8.5% less for their products, and consumer food prices rose over 3%. Swedish meat production has declined, leading to beef shortages and higher prices.
Broader economic consequences include inflation, recession risks, and varied global responses. The conflict is driving up energy and fertilizer prices, threatening food shortages in poor countries, destabilizing fragile states like Pakistan, and complicating inflation control for central banks. Every 10% increase in oil prices could push global inflation up by 0.4 percentage points and reduce economic output by up to 0.2%, according to Kristalina Georgieva. U.S. Treasury yields have risen due to recession concerns and an inflation rate forecast to reach 4.5% over the next 12 months. The world economy has absorbed shocks from the Russian invasion of Ukraine and President Donald Trump's tariffs in 2025, with many economists expressing hope it can stagger through the latest crisis. Responses in Asia include India's restaurants warning of shutdowns, Thailand suspending overseas travel for civil servants, the Philippines introducing a four-day work week, and Vietnam encouraging work from home.
Countries in the Middle East and North Africa are highly vulnerable to food supply chain disruptions. According to the Institute for Public Policy Research, these regions are highly import-dependent for key staples: rice (77%), corn (89%), soybeans (95%), and vegetable oils (91%). Any supply chain disruption will have significant consequences, with examples including a 40% rise in food price inflation in Iran over the past year, sevenfold increases in rice prices, and threefold increases for green lentils and vegetable oil.
Over 670 million people (over 8% of the world's population) suffer hunger, with Phase Five (famine) of the Integrated Food Security Phase Classification scale existing in Sudan, the Gaza Strip (despite a partial resumption of aid), Yemen, South Sudan, and Mali, due to factors like conflict, displacement, and aid constraints.
Geopolitical shifts are emerging, including potential new transport corridors and strategic warfare. It is likely that new overland transport corridors will open, giving Russia, Turkey, and Syria strategic control over supplies. Iranian attacks on desalination plants in Bahrain and near a complex in Saudi Arabia indicate strategic warfare involving water resources.