Middle East War Blocks Hormuz, Driving Energy, Fertilizer and Farm-Cost Shock for Poland and Europe

Middle East War Blocks Hormuz, Driving Energy, Fertilizer and Farm-Cost Shock for Poland and Europe

Escalating conflict involving Iran, the US and regional actors has pushed Brent crude above $100 per barrel and severely disrupted oil and gas flows through the Strait of Hormuz, a key global chokepoint. The resulting spike in fuel, gas and fertilizer prices is rapidly feeding into agricultural production costs in Europe, including Poland, while also lifting freight and insurance costs along critical grain and feed trade routes.

For Polish and wider EU agri‑food markets, the main transmission channels are higher diesel and bunker fuel prices, sharply more expensive nitrogen fertilizers and elevated logistics costs rather than direct loss of agricultural supply from the Middle East. Traders, processors and farmers across the region now face a cost shock reminiscent of 2022’s post‑Ukraine‑invasion energy crisis, but centred this time on Gulf energy infrastructure and maritime flows.

Introduction

The current “Iran war” has evolved into a systemic threat to energy infrastructure across the Gulf, with drone and missile strikes against refineries, export terminals and offshore installations in Iran and neighbouring producers. A near‑blockade of the Strait of Hormuz has removed millions of barrels per day from the seaborne market and disrupted a corridor that typically carries around 20% of global oil trade and a significant share of LNG flows.
This military escalation has driven Brent to intraday highs close to $120 per barrel in early April, while war‑related damage and shipping risks have raised concerns about the durability of supply losses and the potential for further price spikes if the chokepoint remains constrained.

UN trade analysts and commercial banks now underline how the energy and freight shock is spilling over into fertilizer markets, raising the cost of nitrogen and ammonia production and complicating planting and input decisions worldwide. While the Gulf’s direct share of EU fertilizer imports is small, Europe’s gas‑linked nitrogen sector is highly exposed to global gas and power prices, a pattern already visible during the 2022–23 energy crisis and now re‑emerging under new geopolitical conditions.

🌍 Immediate Market Impact

The most immediate effect for commodity markets has been a sharp rise in oil benchmarks: Brent has moved above $100 per barrel, with intra‑day trades approaching $120, and analysts now talk openly about scenarios of $150–200 if Hormuz remains heavily restricted. WTI futures likewise logged strong gains in recent sessions as traders priced in extended disruptions and heightened infrastructure risk.

Higher crude prices are quickly passing through to diesel and bunker fuel, raising operating costs for farm machinery, road haulage and maritime shipping. UNCTAD notes bunker fuel costs have nearly doubled in recent weeks, while war‑risk premiums and partial withdrawal of insurance coverage for Gulf voyages are reshaping global freight patterns. This is amplifying volatility in bulk freight indices, particularly on routes linked—directly or via transshipment—to the Middle East and Indian Ocean.

Natural gas prices in both Europe and Asia have also jumped, pressuring nitrogen fertilizer production costs and margins. For European agriculture, including Poland, the pass‑through is already visible in forward offers for urea, UAN and ammonium nitrate, while some producers and traders warn of renewed curtailments if wholesale gas prices remain elevated through the spring.

📦 Supply Chain Disruptions

While the Middle East is not a major exporter of grains or oilseeds to Poland, the region is central to global energy and fertilizer supply chains. The near‑closure of Hormuz has delayed or rerouted shipments of crude, refined products and LNG, forcing tankers to take longer, costlier routes and reducing vessel availability for other trades.

UNCTAD reports that war‑risk insurance surcharges and bunker costs have risen sharply for vessels operating in or near the Gulf, affecting not only energy cargoes but also container and dry bulk flows transiting the region. For EU importers, this is contributing to higher freight rates on Asia–Europe lanes and selected bulk routes, with cascading effects on the delivered cost of feed ingredients, oilseeds and processed foods into ports serving Central and Eastern Europe.

On the input side, Rabobank’s recent assessment highlights that, although the Gulf accounts for only around 1–2% of EU nitrogen and ammonia imports directly, the conflict’s impact on global gas benchmarks and shipping costs is lifting fertilizer prices well beyond the region. For Polish farmers and cooperatives entering spring fieldwork, this translates into higher replacement costs for nitrogen, phosphates and fuel, even where on‑farm inventories partially cushion the immediate impact.

📊 Commodities Potentially Affected

• Crude oil and diesel: Directly affected by disrupted Gulf exports and elevated war risk, pushing up farm fuel, transport and processing costs across Europe, including Poland.
• Natural gas and LNG: Price spikes driven by constrained Gulf LNG flows and broader energy market uncertainty, with knock‑on effects on European power prices and nitrogen fertilizer production economics.
• Nitrogen fertilizers (urea, UAN, ammonium nitrate): Higher gas costs and freight disruption are lifting global nitrogen benchmarks, raising cost bases for Polish and EU crop production ahead of the 2026/27 season.
• Phosphate and potash fertilizers: Phosphate prices are rising on higher input and freight costs, while potash has so far seen milder moves; both remain sensitive to further logistics shocks.
• Grains and oilseeds: Not directly disrupted in terms of physical supply from the Middle East, but likely to see upward pressure on prices via higher input and freight costs, plus potential demand shifts toward biofuels as oil stays expensive.
• Edible oils and biodiesel feedstocks: Elevated fossil fuel prices improve the relative economics of biofuels, supporting demand for rapeseed, sunflower oil and other feedstocks produced in Central and Eastern Europe.

🌎 Regional Trade Implications

For Poland and its neighbours, the Iran war’s fallout is transmitted mainly through energy and fertilizer import bills, freight costs and macroeconomic conditions in key export markets. The European Central Bank and national authorities warn that the energy‑driven inflation uptick—eurozone headline inflation rose to 2.5% in March partly on higher fuel prices—could weigh on household spending and food demand later in 2026.

Energy‑importing economies in Emerging Europe and the Mediterranean, many of them important outlets for EU grain, dairy and meat exports, are expected to face slower growth and higher inflation due to rising energy and fertilizer prices. This may tighten consumers’ budgets and increase price sensitivity, complicating export strategies for Polish producers of poultry, dairy and processed foods.

Conversely, EU producers of oilseeds and rapeseed‑based biodiesel could benefit from improved margins as high fossil fuel prices support biofuel demand in Europe and beyond. For Polish rapeseed growers and crushers, the combination of firm energy prices and constrained fertilizer availability may incentivise more acreage, provided input financing remains accessible and farmers can manage cost risks.

🧭 Market Outlook

In the short term, markets are likely to remain highly sensitive to any military or diplomatic developments affecting Hormuz and key Gulf energy installations. Analysts highlight scenarios in which Brent stabilises in the $120–150 range if disruptions persist into late April, with upside risks in the event of further infrastructure damage.

For agricultural markets, the immediate focus will be on the trajectory of European gas prices, fertilizer production run‑rates and freight indices through Q2. Any renewed closures or curtailments at EU nitrogen plants, or further increases in bunker costs, would tighten input availability for the 2026/27 crop cycle and potentially lower application rates, with yield implications into 2027.

Polish and European traders will closely monitor policy responses, including potential fuel tax reliefs, fertilizer support schemes and strategic stock releases. At the same time, end‑users may seek longer‑term supply contracts or hedging strategies to manage fuel and fertilizer price volatility.

CMB Market Insight

The Iran war and associated Hormuz crisis have rapidly evolved into a broad energy and input cost shock rather than a direct food‑supply disruption. For Poland and its regional peers, the strategic risk lies in a prolonged period of elevated fuel and gas prices that structurally raise production costs and erode farm profitability, particularly in input‑intensive arable and livestock systems.

Commodity participants should prepare for an environment of sustained volatility in energy, fertilizer and freight markets, with second‑round effects on grains, oilseeds and animal protein prices. Active risk management—via fuel and input hedging, diversified sourcing, and flexible contract structures—will be critical as the Middle East conflict continues to reshape the cost base and competitiveness of European agriculture.