Disruption of the Strait of Hormuz triggers a severe shock to global commodity flows. This situation carries significant implications for food security, agricultural production, and the stability of global markets, says FAO Chief Economist Máximo Torero.
Tanker traffic through the Strait of Hormuz has collapsed by more than 90 percent since the recent escalation began. This vital artery typically handles approximately 20 million barrels of oil and 30 percent of traded fertilizers daily. Consequently, Torero emphasizes that this represents a systematic shock affecting food systems on a global scale.
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Fertilizer Supply Chains Under Threat
The Gulf region currently accounts for nearly half of the global sulfur trade, essential for phosphate fertilizer production. Disruptions to this supply risk fracturing fertilizer production in major countries, leading to a worldwide shortage of inputs. Additionally, surging insurance costs have compounded shipping constraints, with war-risk premiums rising as high as 10 percent.
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Rising Costs for Global Farmers
Disruptions are already translating into higher costs for farmers as fertilizer prices surge across the Middle East. Middle East granular urea increased by 19 percent, while Egyptian urea prices rose by 28 percent this March. FAO projections suggest that global fertilizer prices could average 20 percent higher if this crisis persists.
The Decisive Factor of Duration
Torero stressed that the duration of this crisis will ultimately determine the total scale of its global impact. A short-term disruption of one month may remain contained because global food stocks are currently sufficient. However, a crisis lasting three months or longer will significantly affect global planting decisions for the year 2026.
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Critical Analysis
The FAO’s warning highlights the extreme fragility of a global food system dependent on a single geographic chokepoint. While the world often focuses on oil, the threat to sulfur and fertilizers poses a more permanent risk. If fertilizer use drops, the nonlinear yield response could trigger a major global food shortage by 2026.
Furthermore, the surge in insurance premiums suggests that commercial risk is outpacing diplomatic efforts in the region. Even a brief conflict could have a long tail of economic pain as shipping routes take months to stabilize. Ultimately, the global community must recognize that energy security and food security are now inextricably linked.
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Q&A: Understanding the Crisis
Why is the Strait of Hormuz critical for food?
It carries 30 percent of traded fertilizers and is a hub for sulfur used in phosphate production.
What is the impact on fertilizer prices?
Prices for urea have surged by up to 28 percent, and costs could remain 20 percent higher in 2026.
How are farmers responding to rising costs?
Many producers are likely to reduce fertilizer application or shift toward less input-intensive crops like soybeans.
FAQ
Is this only an energy crisis?
No, it is a systematic shock that directly affects the entire global agricultural value chain.
What happens to crop yields?
Modest reductions in fertilizer use can lead to disproportionately large declines in yields due to nonlinear responses.
How has shipping insurance changed?
War-risk premiums have jumped to 10 percent of vessel value, requiring coverage resets every seven days.
