The disruption of shipping in the Strait of Hormuz is increasingly exacerbating the risks to the global economy, including food security. As the Financial Times reports, restrictions on energy supplies have already caused fertilizer shortages, logistical disruptions and could lead to a rise in global food prices.
The Strait of Hormuz is one of the world’s key transport corridors: about 20% of global oil and gas exports pass through it, as well as a significant share of seaborne fertilizer trade. Any disruptions in this region have an immediate effect on global supply chains.
Fertilizers under attack — the agricultural sector at risk
The reduction in natural gas supplies has already affected the production of ammonia, a basic component of mineral fertilizers. According to Pablo Galante Escobar, head of the liquefied natural gas division of Vitol, the situation remains unstable and could quickly transform from an energy crisis to a food crisis.
Following the US and Israeli strikes on Iran, industrial demand for gas has fallen by around 40%, hitting fertilizer producers particularly hard. In the event of further shortages, farmers could face reduced yields and consumers could see soaring food prices.
Logistical collapse and the race for routes
The problems are not limited to energy. The redistribution of transport flows has led to congestion on alternative routes. In particular, the pressure on the Panama Canal has increased significantly, with tanker queues reaching 40 days.
The cost of transporting grain in some directions has already increased by 50–60%. As Clarksons analyst Louise Follis notes, large energy companies are willing to pay significant amounts for priority passage through the canals, while the agricultural sector finds itself in a less competitive position.
Risks that are still underestimated
Experts emphasize: markets do not yet fully realize the scale of the potential crisis. According to estimates by top manager of Louis Dreyfus Company Vijay Chakravarty, even a few months of disruptions can have long-term consequences for crop cycles in the world.
An additional risk factor has become the shortage of sulfur – an important element in the production of fertilizers, which is currently actively used by the metallurgical industry. As a result, the agricultural sector is facing double pressure: rising costs and decreasing availability of resources.
Panic effect: a new wave of price increases
Analysts also warn of a possible “panic effect”. If states begin to massively form strategic food reserves, this may heat up the markets even more. Countries dependent on food imports remain the most vulnerable.
As a result, the situation around the Strait of Hormuz is already going beyond the regional conflict and is becoming a factor of global economic instability. Further developments will determine not only energy prices, but also the availability of food for millions of people around the world.
