Middle East War Chokes Key Sea Lanes, Raising New Food and Fertilizer Cost Risks

Escalating conflict in the Middle East is tightening the squeeze on two of the world’s most critical maritime chokepoints – the Strait of Hormuz and the Red Sea/Bab el‑Mandeb – with mounting implications for food, feed and fertilizer markets. The effective closure of Hormuz by Iran and the renewed entry of Yemen’s Houthi rebels into the war are driving up fuel and logistics costs and heightening the risk of renewed disruptions to container and bulk flows between Asia, the Middle East, Europe and Africa.

While the immediate headlines focus on oil and LNG, the same shipping lanes also carry grains, oilseeds, sugar, rice and key fertilizer nutrients into net‑importing regions in the Middle East, North Africa and South Asia. With Brent already surging and insurers sharply repricing risk, agricultural supply chains are bracing for higher freight, longer routes and potential delivery delays just as key sowing and import windows approach.

Introduction

Since late February 2026, the war between the United States–Israel and Iran has escalated into a wider regional conflict, culminating in Tehran’s move to effectively close the Strait of Hormuz to commercial traffic and conduct repeated attacks on merchant vessels. Major container and tanker operators have suspended or curtailed transits through Hormuz and related routes, rerouting flows where possible.

On 28–30 March, Iran‑backed Houthi rebels in Yemen formally joined the conflict, claiming missile launches on Israel and raising expectations they could again target shipping in the Bab el‑Mandeb Strait and southern Red Sea, a route that typically carries about 12% of global trade and much of the diverted oil now avoiding Hormuz. Market analysts warn that the combination of Hormuz and Red Sea risk is feeding directly into fuel prices and global transport costs, with knock‑on effects across energy‑intensive food and fertilizer value chains.

🌍 Immediate Market Impact

Energy markets have reacted sharply: Brent crude has posted a record monthly rise, with prices propelled by stranded Gulf exports and fears of wider shipping disruptions as Houthi capabilities re‑enter focus. Higher bunker fuel costs are rapidly transmitting into container and bulk freight rates, particularly on Asia–Europe and Asia–MENA lanes that depend on Suez and the Red Sea corridor.

For agricultural commodities, the immediate effect is less about physical shortages than about cost inflation and elevated basis risk. Import‑dependent Gulf states, already experiencing a “grocery supply emergency” owing to disrupted food inflows and air‑freighted staples, illustrate how tight logistics can quickly feed into retail food inflation when maritime chokepoints are constrained. Traders are reporting higher risk premiums on routes touching the Red Sea, Persian Gulf and East Mediterranean, with some cargoes delayed or rerouted around the Cape of Good Hope.

📦 Supply Chain Disruptions

The closure of Hormuz has significantly reduced outbound volumes of oil, LNG and associated petrochemical products from key Gulf exporters, tightening global supplies of nitrogen fertilizer feedstocks (notably ammonia and urea) and raising production costs for fertilizer plants elsewhere. At the same time, concerns about renewed Houthi attacks on shipping in the Red Sea and Bab el‑Mandeb are prompting carriers to reconsider Suez routings, adding transit time and fuel consumption.

Food‑importing Gulf Cooperation Council (GCC) states, which rely on the Hormuz corridor for more than 80% of caloric imports, have already seen up to 70% of food inflows disrupted, forcing emergency airlifts of staples and driving consumer price spikes of 40–120% for some items. Further south, any sustained threat to Red Sea shipping would complicate grain, sugar and edible oil deliveries into East Africa and Yemen, where imports are critical to food security. Europe’s seafood and broader food sectors are also exposed via longer Asia–Europe routes and container imbalances.

📊 Commodities Potentially Affected

• Wheat and coarse grains: Higher freight and insurance on Black Sea, EU and Australian wheat heading to MENA and Asia via Suez may widen delivered price spreads versus local origins and pressure import programs in price‑sensitive markets.
• Rice and sugar: Key exporters in Asia and Brazil rely on Red Sea/Suez routes for shipments to the Middle East and North Africa; diversions around the Cape could lengthen lead times and lift CIF prices.
• Oilseeds and vegetable oils: Soybean, rapeseed and sunflower oil cargoes destined for MENA and South Asia face higher freight costs, while energy‑linked processing margins for crushing and refining may be squeezed by fuel and utility price spikes.
• Fertilizers (nitrogen, phosphate, potash): The fuel crisis and disrupted Gulf exports are tightening global availability of nitrogen products and pushing up prices; higher shipping risk premiums further raise landed costs, especially into Africa and South Asia.
• Seafood and aquaculture inputs: The seafood sector is already reporting pressure from higher fuel and container costs, which can also affect feed ingredient flows (fishmeal, soymeal, wheat) and cold‑chain logistics.

🌎 Regional Trade Implications

Gulf and Red Sea importers are the most acutely exposed, facing both physical disruption and sharply higher logistics costs. This could accelerate diversification of sourcing away from distant origins toward nearer suppliers in the Black Sea, EU and Eastern Mediterranean where overland or shorter‑sea routes are available, though price competitiveness remains uncertain. Some MENA buyers may also shift tenders toward suppliers able and willing to absorb war‑risk premiums or use alternative ports.

Exporters outside the immediate conflict zone – notably in South America, North America and Australia – could see mixed effects. Longer routes to MENA via the Cape of Good Hope raise voyage times but may become more attractive if Red Sea risk escalates. Conversely, Asian importers that previously relied on Gulf energy and fertilizer supplies may look to increase purchases from Russia, North Africa and North America, reshaping traditional trade lanes and arbitrage relationships across grains and inputs.

🧭 Market Outlook

In the short term, markets are likely to price in a sustained risk premium for any cargoes transiting Hormuz, the Red Sea and adjacent waters, maintaining upward pressure on freight and energy costs and supporting benchmark prices for fertilizer and key food commodities. Volatility will remain elevated around any incident involving commercial vessels or critical energy infrastructure, as well as around signals on potential ceasefire talks or maritime security arrangements.

Traders will closely monitor: the durability of Iran’s closure of Hormuz; the scale and frequency of Houthi activity against shipping; insurer and naval responses; and policy actions by import‑dependent governments, including subsidy adjustments, stock releases and changes to import tender strategies. Prolonged disruption through mid‑year would increase the risk that high input and logistics costs influence planting decisions and food price inflation into 2027, particularly in lower‑income, food‑importing countries.

CMB Market Insight

The convergence of a Hormuz fuel crisis with renewed Red Sea security risks marks a critical stress test for global agricultural supply chains. Even if physical availability of grains and fertilizers remains adequate in aggregate, the geography of risk and the cost of moving commodities are shifting rapidly, with disproportionate impacts on net‑importing, price‑sensitive regions.

For market participants, this environment calls for tighter voyage‑level risk assessment, diversified origin and route planning, and proactive engagement with counterparties on delivery terms and price indexation that reflect elevated freight and insurance costs. The strategic takeaway is clear: chokepoint exposure is now a central variable in agricultural trade flows and pricing, and will remain so as long as the Middle East conflict keeps the world’s key sea lanes on a war footing.