The U.S. war in Iran has led to a disruption to the world's seaborne fertilizer supply chain. The World Bank projects that fertilizer prices could jump an average of 31 percent this year. South Asia, East Africa and the Middle East are especially vulnerable. Experts recommend more sustainable agricultural methods and resilient supply chains to improve food security.
If the war ends this month, we will see lower economic growth and higher inflation. The farming sector, both in the U.S. and globally, is taking a particular hit. About a third of the world’s nitrogen-based fertilizer was going through the strait. Fertilizer prices are up at least twenty per cent. There is less rice planting in the developing world.
The Strait of Hormuz crisis and the Bab al-Mandab Strait crisis have shown that narrow maritime passages can be used as political weapons in future conflicts. North Sea Route (NSR) or the Arctic route has come into greater focus. Russia has established laws and codes for regulating passage through the NSR.
There is an El Niño in the Pacific Ocean. It is predicted to be the strongest of the current "Super El Niño". It is expected to cause food shortages in the whole world. The Strait of Hormuz war in Iran has been going on for 100 days. 45 million more people now face food insecurity as a result of the war in the Gulf. The situation in Somalia is getting worse.
Far East-to-U.S. East Coast rates have risen 92% since late February to $5,103 per FEU. Rates from the Far East to North Europe and the Mediterranean have increased 65% and 51% respectively. There is congestion at major transshipment hubs including Singapore and Port Klang due to the Strait of Hormuz blockade. Drewry’s World Container Index jumped 23% this week to $3,433 per 40-foot container.
Demand for biofuels is expected to rise by nearly a third this year. The US, Indonesia, Brazil, Thailand and others are trying to increase biofuel use. The price of oil has jumped to nearly $100 a barrel after the US-Israeli attacks on Iran and the closure of the strait of Hormuz. Fertiliser supply has been constrained by the war and prices have soared. Biofuels compete with food crops for land and fertiliser.
IPES-Food report urges a strategy of 'resilient self-reliance' to improve equity, sustainability and solidarity. Global food systems have been profoundly transformed by the geopolitical changes of the last four decades. Corporate interests have reshaped food systems over the last half-century. The legitimacy and capacity of multilateral institutions have been undermined by superpowers abusing international arrangements for their own advantage.
The World Bank has cut its global growth forecast for 2026 to 2.5 percent from 2.9 percent predicted in January. It cites surging energy prices, rising inflation and higher borrowing costs. Iran's closure of the Strait of Hormuz will push global inflation to 4 percent this year. The organisation has set aside up to $60 billion to help developing countries.
A new report from the World Bank and S&P Global Market Intelligence argues that ports are active participants in determining whether global shocks spread or are contained. The relationship between port performance and supply chain stress runs in both directions. East Asian ports continue to dominate global rankings, while European ports are recovering.