Rising tensions in the Middle East are threatening to disrupt global fertilizer and energy markets, potentially leading to sharp increases in food prices worldwide, according to a new analysis published by the Financial Times.
Executives and market analysts warn that the ongoing regional instability could create ripple effects far beyond the Gulf, pushing up costs for farmers and ultimately hitting consumers at grocery stores across the U.S. and Europe.
The Financial Times reports that roughly 20% of global urea production has already been shut down, as conflict has forced the closure of major ammonia plants in Iran and reduced gas supplies in Egypt.
Svein Tore Holsether, CEO of Yara International, one of the world’s largest fertilizer producers, described the situation as “deeply worrying” and warned that it could severely impact crop yields in key exporting countries.
“Disruptions in fertilizer supply translate directly into lower agricultural output, and ultimately into higher food prices for everyone,” Holsether said.
At the same time, Brent crude prices have surged to nearly $78 per barrel, marking a roughly 20% increase in June alone — the sharpest monthly rise since 2020. The rise in energy costs is further amplifying inflationary pressures across the food supply chain, from farm equipment fuel to global shipping.
While the Strait of Hormuz, a critical chokepoint for global energy flows, remains open, market analysts remain on high alert for any further escalation that could disrupt traffic.
According to the Financial Times, if fertilizer and energy disruptions continue, the world could face a major “food price shock,” with staple items like grains, dairy, and meat seeing significant price hikes.
U.S. consumers, already dealing with persistent inflation, could be particularly affected. Rising costs for producers typically lead to higher prices on supermarket shelves, disproportionately impacting lower- and middle-income households.
Central banks, including the U.S. Federal Reserve and the Bank of England, are closely watching the situation. Policymakers had hoped to ease interest rates later this year but may now reconsider if food and energy inflation persist.
Meanwhile, agriculture and trade experts are urging governments to bolster domestic fertilizer production and diversify supply chains to mitigate future geopolitical risks.
