The Iran war is no longer just an oil story—it's starting to look like the next global food inflation shock. Crude prices have surged above $110 as tensions around the Strait of Hormuz disrupt supply expectations. But the bigger risk may lie in what moves through that same chokepoint beyond oil.

The Strait handles roughly a third of global fertilizer trade, and disruptions are already pushing prices sharply higher. Reduced supply and higher prices of fertilizers could deal a blow to farming output, fueling food inflation.

Fertilizer Prices Are Already Moving

Urea prices have jumped around 30–40% across key markets, per Bank of America analysts, as supply tightens and energy costs rise. Nitrogen fertilizers, which depend heavily on natural gas, are particularly exposed to the ongoing disruption.

Analysts have warned that prices could move even higher if the conflict drags on, raising concerns about availability ahead of key planting seasons.

From Farms To Food Prices

The impact doesn't stop at fertilizers—it flows directly into food production.

Disruptions to fertilizer shipments—already pushing prices up 30–40%—are raising concerns about lower crop yields and tighter food supply.

Farmers may adjust crop choices and cut fertilizer use as prices spike, with some likely to scale back on nitrogen-heavy crops like corn or reduce application rates amid tighter supply and higher costs, Seth Meyer of the Food and Agricultural Policy Research Institute warned, according to a Reuters report. That, in turn, risks lower yields and tighter food supply going forth.

Julie Kozack, director of the IMF’s Communication Department, pointed out in a press briefing on March 19: “Oil and gas prices, as you know, have increased by more than 50 percent over the last month to over $100 a barrel. In addition, fertilizer shipments have been disrupted. And this, along with transportation disruptions, raise risks that we could see increases in food prices. And those could be substantial, again depending on the duration and intensity.”

This would potentially add in a new layer to the inflation outlook just as markets were expecting relief.

Stocks And Markets May Not Be Pricing It In

This creates a divergence across markets.

Fertilizer producers like CF Industries Holdings, Inc (NYSE:CF) , Nutrien Ltd (NYSE:NTR), and Mosaic Company (The) (NYSE:MOS) could benefit from tighter supply and rising prices, while agriculture-focused ETFs such as VanEck Agribusiness ETF (NYSE:MOO) may see renewed interest.

But for consumers—and inflation-sensitive sectors—the implications are more challenging.

What began as an energy shock is now spreading into the real economy, and the second-order effects may just be getting started.

Image: Shutterstock