The Iran War’s Other Energy Shortage—Food
Gulf states are a major source of fertilizer, and it’s too late to avert the effects of an export disruption.
By Francisco Martin-Rayo
The Iran war will constrain the supply not only of oil and gas but of food.
Two shocks hit the global food system following American and Israeli attacks on Iran, but only one was widely reported.
First, the Strait of Hormuz was effectively closed beginning Feb. 28, day one of the war.
Second, on March 18, Iranian missiles struck Ras Laffan Industrial City in Qatar.
In both cases, media coverage has focused on petroleum prices.
That framing is dangerously incomplete.
The two events compound each other’s effect on the global food supply.
The strait closing cut off the flow of fertilizer from the Gulf to the world.
The strikes on Ras Laffan then halted the movement of liquefied natural gas feedstock, which powers fertilizer manufacturing in those countries that might otherwise compensate for the Gulf’s missing output of fertilizer.
The numbers make the point bluntly.
Roughly 50% of globally traded urea, the nitrogen fertilizer that underpins nearly half of global food production, originates in the Gulf and transits the strait.
QAFCO, Qatar’s state fertilizer company, operates the single largest urea production site on earth, with annual output of 5.6 million metric tons or about 14% of global supply.
QAFCO production has been offline since March 4.
Russia, the next-largest supplier, already faced export restrictions before the first missile flew.
China restricts exports aggressively to protect its own supply.
The market, not finding an alternative, is repricing the shortage, with urea at the New Orleans hub rising from $516 a ton to $680 in less than a week after Feb. 28, with credible forecasts above $800 if the closing extends through May.
The timing is the cruelest part.
Last week I spoke with a grain grower in Australia, a country that imports 70% of its urea from the Gulf region.
His operation has access to about 15% of what it needs with planting time weeks away and no viable source to fill the gap.
He was describing a physical absence, not a price problem.
That same conversation, in different languages about different crops, is being replicated from the Punjab in India to Italy’s Po Valley and Brazil’s Cerrado.
In the U.S., too, farmers face rising costs, though not a shortage because of domestic production.
Assuming it will take at least six months to return traffic to normal in the Strait of Hormuz, our base case at Helios AI predicts global food prices will rise 12% to 18% above precrisis levels by the end of 2026 and even higher in the first half of 2027 before stabilization becomes possible.
This scenario reflects three sequential shocks.
The first is already here, brought on by the rising cost of energy and logistics, which is affecting every stage of food production, from diesel-powered irrigation to refrigerated freight.
The second will arrive in the third and fourth quarters of 2026, when spring planting shortfalls materialize in grain and oilseed harvest data.
The third shock will begin in early 2027, as grain stocks drawn down in 2026 go unreplenished because this year’s harvests fall short.
This is where price pressure stops being cyclical and starts being structural.
Compounding all three is a risk that futures markets aren’t adequately pricing.
When a different supply shock caused food prices to spike in 2022, Serbia, Hungary, India, Indonesia and Argentina all restricted key food exports within months of each other.
Each decision was individually defensible as domestic policy.
Collectively, they removed supply from global markets when the world needed it most.
The conditions are ripe for this to happen again in 2026: Price signals are sharper, political pressure is higher, and governments have learned that export restrictions work as a short-term tool even when they are economically destructive over the longer term.
That cascade isn’t in most procurement scenarios I come across.
It should be.
The distinction that separates this crisis from every supply shock the food system has absorbed before is availability.
A price shock means you can still source wheat, corn, soybean meal.
You pay more, compress margins and pass much of the additional cost on to customers.
Physical unavailability means the cargo doesn’t exist to be purchased at any price.
Spot markets that normally clear within days go weeks without offers because no one is selling.
The strait will eventually reopen.
QAFCO too.
But the food-system clock can’t be turned back.
The Australian grower scheduling his planting with 15% of his required nitrogen will produce a harvest shaped by today’s conditions.
The question isn’t whether the damage will happen. It already is.
Mr. Martin-Rayo is CEO of Helios AI, a commodity intelligence software company.
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