Strait of Hormuz Reopening Eases Energy Shock but Leaves Food and Fertilizer Markets on Edge

Strait of Hormuz Reopening Eases Energy Shock but Leaves Food and Fertilizer Markets on Edge

The gradual reopening of the Strait of Hormuz following the recent U.S.–Iran ceasefire is starting to ease the worst phase of the global energy shock, with tanker and container traffic slowly resuming. However, mine-clearance operations, elevated insurance costs and lingering geopolitical tensions mean agricultural supply chains, fertilizer flows and food prices will remain under pressure for months.

For commodity traders and agribusinesses, the immediate risk of a prolonged total shutdown has diminished, but logistics through one of the world’s key chokepoints for oil, LNG and fertilizers are still fragile. Softening crude prices offer some cost relief, yet the earlier surge in energy and freight costs is still working its way through global food production and distribution systems.

Introduction

After more than three months of severe disruption caused by the Iran war and a U.S. naval blockade, commercial traffic through the Strait of Hormuz has begun to recover following an interim agreement and 60-day ceasefire between Washington and Tehran. Vessel-tracking data and industry reports show that tankers and container ships are again transiting, though volumes remain well below pre-conflict levels.

Before the conflict, the strait handled roughly one-fifth of global crude oil trade and significant volumes of LNG and nitrogen-based fertilizers. Its effective closure since late February triggered one of the largest energy supply disruptions in modern history, sending Brent above USD 118 per barrel at the height of the crisis before easing back toward the high USD 70s as traffic cautiously resumes.

Immediate Market Impact

The reopening has already narrowed risk premiums in oil and LNG markets, reduced the most extreme freight dislocations and tempered fears of acute fuel shortages. Tanker traffic is building from a very low base as charterers test new security protocols and as some previously stranded vessels complete long-delayed voyages.

Nonetheless, the maritime security threat level remains elevated, and insurers continue to charge additional war-risk premia for transits. Shipping lines are factoring in potential delays from demining operations and naval escorts, while risk of renewed escalation—highlighted by Iran’s threats to reclose the strait amid regional tensions—keeps volatility high across energy and related agricultural markets.

As crude benchmarks retreat from crisis peaks, fuel costs for farm operations, processing plants and transport fleets should gradually moderate. However, the cost shock from earlier weeks—covering bunker fuel, diesel, and power prices—is still filtering through supply chains, suggesting food input inflation will remain elevated into the coming quarters even if spot energy prices stabilize.

Supply Chain Disruptions

Logistics through the Persian Gulf remain partly impaired. Hundreds of vessels accumulated on either side of the strait during the closure, and port terminals in the region are now facing bunching of arrivals, berthing delays and congestion as they work through the backlog.

Full normalization of shipping flows is expected to take weeks at minimum due to mine-clearance requirements, re-routing of traffic lanes and the need for clear navigation rules. Many operators are still reluctant to send new tonnage until they see consistent safe passage and more clarity on naval protection arrangements and insurance coverage.

For agricultural supply chains, the main pinch points are fertilizer plants and export terminals in Gulf producers that had reduced output or diverted cargoes during the conflict. Even as loadings resume, the lag in restarting production, repositioning vessels and replenishing depleted inventories in importing regions implies continued tightness in fertilizer availability and higher delivered costs.

Commodities Potentially Affected

• Crude oil and refined fuels – The strait normally carries around 20% of global crude trade; disruptions and cautious reopening have driven extreme price swings, directly affecting fuel costs for farming, processing, shipping and trucking.
• LNG and natural gas – Reduced and uncertain LNG flows from Qatar and other regional exporters have tightened gas markets, supporting higher electricity and nitrogen fertilizer production costs in importing economies.
• Fertilizers (urea, ammonia, phosphates) – Gulf producers account for roughly one-quarter of global ammonia trade and over one-third of urea exports; constrained shipments through Hormuz have raised prices and increased procurement risk for major crop producers worldwide.
• Cereals and oilseeds – While not shipped primarily via Hormuz, benchmark wheat, corn and soybean markets are reacting indirectly to higher fuel and fertilizer costs, as well as risk premiums tied to broader Middle East instability.
• Vegetable oils and sugar – Refining and logistics margins are sensitive to energy costs; any sustained premium on bunkers and power in key refining hubs can translate into firmer FOB and CIF prices.

Regional Trade Implications

Middle Eastern hydrocarbon and fertilizer exporters are regaining partial access to seaborne markets, but their commercial relationships are being reshaped. Some buyers have accelerated diversification toward suppliers outside the Gulf, including North Africa, Russia, North America and Southeast Asia, to reduce dependence on the Hormuz corridor.

Pipeline exports from Saudi Arabia and the UAE helped cushion some of the oil shortfall during the closure and are now set to remain heavily utilized, potentially locking in higher long-term flows that bypass Hormuz altogether. This could gradually reconfigure tanker routes and storage patterns in the Indian Ocean and Red Sea basins.

For importing regions, South and East Asia remain the most exposed to residual disruptions, given their heavy reliance on Gulf energy and fertilizer. Europe and the Americas face indirect impacts through higher global benchmarks and tighter nitrogen markets, but diversified sourcing and strategic stocks offer somewhat greater resilience.

Market Outlook

In the near term, markets are likely to oscillate between relief over resumed transits and concern about the fragility of the ceasefire and the pace of demining and insurance normalization. Energy and fertilizer prices may ease further from crisis highs but are expected to remain above pre-war averages, keeping cost pressure on agricultural producers into the next planting seasons.

Traders will closely monitor daily ship counts through the strait, war-risk premiums, any new security incidents, and policy signals from major central banks balancing inflation risks with slowing growth. On the macro side, the World Bank’s latest projections of global GDP growth of about 2.5% this year, only slightly below earlier expectations, suggest a weak but ongoing demand backdrop for food and feed commodities.

Given the experience of recent months, many governments and large agribusinesses are likely to accelerate strategies around supply-chain diversification, strategic stockpiling and regional production capacity for fertilizers and fuels, reinforcing a more fragmented but potentially more resilient global trading system.

CMB Market Insight

The reopening of the Strait of Hormuz marks an important turning point for energy and agricultural markets, but it does not erase the structural shock that has already occurred. Energy and fertilizer costs will remain a central driver of farm margins, food processing economics and trade flows well into the next season, even as spot oil prices retreat.

For commodity traders, the key will be dynamic risk management: maintaining diversified origination and destination options, monitoring freight and insurance developments on a voyage-by-voyage basis, and reassessing pricing formulas that link agricultural contracts to fuel and fertilizer benchmarks. For importers and food industry players, the episode underscores the strategic value of inventory buffers and long-term supply partnerships that can withstand disruptions at critical maritime chokepoints like Hormuz.