The Strait of Hormuz, a narrow but critical waterway, transports a significant portion of the world’s energy and agricultural inputs. Disruptions since the outbreak of hostilities on February 28 are already limiting flows of oil, gas and fertilizers for newly planted staple crops, with knock-on effects extending far beyond the Middle East.
The Strait of Hormuz is a narrow but vital shipping route linking the Persian Gulf with the Gulf of Oman and the wider Arabian Sea. It is located between Iran to the north and Oman and the United Arab Emirates to the south.
“We have 30 to 35 percent of crude oil that doesn’t move, 20 percent of natural gas… and 20 to 30 percent of other fertilizers that don’t move.”said Máximo Torero, chief economist of the Food and Agriculture Organization (FAO).
“That is the magnitude of the potential impact,” he warned.
Supply bottleneck despite ceasefire
While the ceasefire briefly raised hopes that shipping could resume, uncertainty remains high. Talks between the United States and Iran, mediated by Pakistan this weekend, failed to make any progress.
Many ships remain stranded in the Gulf and new shipments have yet to arrive in the corridor. Shipowners and insurers are reluctant to risk expensive assets and crews amid current insecurity. Even if tensions ease, traffic could take days or weeks to return to normal.
This delay is critical, warns David Laborde, Director of the FAO Agri-Food Economics Division.
Much of the cargo that left the Gulf before the crisis has already reached its destination, meaning the world is now entering a phase in which supplies could begin to run short.
“We’re going to see a real supply disruption” in the coming days, he said.
Global food markets remain stable for now, supported by existing stocks, even as supply disruptions raise concerns for the coming months.
A crisis overdue – for now
Despite sharp increases in input costs, global food prices have not yet skyrocketed, a point that FAO economists stress should not be confused with a sign of underlying stability.
The FAO Food Price Index for March showed only modest increases, reflecting strong global stocks and good harvests last year.
“We have sufficient supplies… and good stocks that allow the agri-food system… to be resilient to this shock,”said Mr. Torero.
But that buffer may not last long. As planting decisions are made in the coming weeks, farmers facing higher costs and limited access to fertilizer may reduce input use or switch crops, which will reduce yields in the next season.
“If we do not have the supplies in the necessary time…This implies that producers will have to produce with fewer inputs,” he said. “And therefore, they might have lower returns.”
That, in turn, could drive up food prices later in the year and next.
Transportation and logistics operations face pressure from rising fuel costs linked to global supply disruptions. (file photo)
A chain of interdependence
The risks extend throughout the entire food value chain. Energy sustains everything from agricultural machinery to transportation, while fertilizers – particularly nitrogen-based products linked to natural gas – are essential for crop performance.
The impact is global: from the United States and Canada to Australia, farmers depend on stable access to energy and inputs to maintain production, while import-dependent countries – including many in Africa, such as Kenya – face greater exposure to price shocks and supply disruptions.
Higher oil prices are also increasing incentives to divert crops such as corn, sugar and oilseeds toward biofuel production, tightening the balance between food and fuel.
“If we have a growing demand because biofuels begin to be consumed more… and a lower supply because we have fewer inputs… food prices will rise,”warned Mr. Laborde.
Farmers face rising costs and uncertainty as higher fuel and fertilizer prices threaten crop yields and future harvests. (file photo)
Risks of a ‘perfect storm’
FAO economists warn that the situation could deteriorate further if additional pressures emerge, including export restrictions or climate shocks such as the El Niño weather pattern.
In past crises, countries have restricted exports to protect domestic markets, exacerbating global shortages.
“We need to avoid restrictions on exports… especially now for fertilizers and energy,“said Torero, warning that without coordination, Vulnerable countries could run out of essential supplies.
A global risk with local consequences
Although the crisis is centered in the Middle East, its effects are spreading rapidly. Countries in Asia and the Global South are particularly exposed due to their dependence on imported energy and fertilizers and their position in the cropping calendar.
“This will begin to move from east to west… but also from south to north,”said Mr. Torero.
The consequences are both economic and human. Higher food prices hit poorer households hardest, while rising inflation could force governments to tighten monetary policy, slowing growth and increasing debt burdens.
Farmers are also under increasing pressure. Rising input costs and uncertainty are reducing margins and increasing the risk of long-term disruptions to production.
“When you push them too hard, you can bankrupt them,” Laborde said. “And then it means there will be a supply problem… for a longer period.”
Communities in developing countries are particularly vulnerable to rising food prices and supply disruptions. (file photo)
The alarm bells are ringing
The first signs of disruption are already emerging in parts of Asia.
In South Asia, rising fuel and fertilizer costs are beginning to be reflected in food prices and agricultural decisions, as import-dependent economies come under increasing pressure.
In Nepal, where millions of households rely on remittances from Gulf countries, mobility disruptions and rising transportation costs are already being felt, raising concerns that what begins as an external shock could quickly translate into internal difficulties.
A narrow window to act
FAO urges governments and international financial institutions to act quickly.
Near-term priorities include avoiding trade restrictions, supporting vulnerable households through social protection, and ensuring liquidity for farmers, including through credit lines and import financing.
In the longer term, the crisis underlines the need to diversify energy sources, strengthen infrastructure and reduce dependence on hotspots such as the Strait of Hormuz.
For now, the FAO highlights that A full-blown food crisis is not inevitable, but the window to avoid it is rapidly closing..
“The clock is the key… Let’s avoid a perfect storm: let’s be aware of the risks, implement the appropriate policies and seek the necessary diplomatic solutions. To avoid a food crisis we do not need it,” Mr. Torero urged.