As the conflict in West Asia continues, the blockade of the Strait of Hormuz has disrupted global oil supply, raising fears of a fresh wave of inflation worldwide. Petrol and diesel prices are already rising rapidly in several countries, putting pressure on household budgets.
Now, international media reports suggest that food prices could also surge in many parts of the world. According to reports, the cost of essential items such as grains, fruits and vegetables could increase sharply if the conflict between Iran and Israel continues for several more weeks.
Supply disruptions could trigger food shortages
According to reports by Dow Jones and The New York Times, a prolonged conflict could lead to a level of inflation and food shortages not seen in decades.
One of the earliest and most severe impacts of the war has been on global logistics. Israeli airstrikes targeting Iranian oil depots and refineries have pushed crude oil prices sharply higher, with prices now nearing USD 100 per barrel. As transport costs rise, the expense of moving food items such as grains, fruits and vegetables across countries has increased significantly.
Rising fuel costs hit global agriculture
Experts say rising diesel prices are already becoming a major challenge for large grain exporters such as Brazil and the United States. Higher fuel costs increase the cost of farming and transportation, which ultimately pushes up food prices worldwide.
However, the biggest concern for global agriculture is fertiliser supply. Nearly one-third of global urea exports and about a quarter of ammonia exports pass through the Strait of Hormuz. Major fertiliser exporters including Iran, Saudi Arabia, Qatar and the United Arab Emirates depend heavily on this route.
Any disruption to this passage could prevent fertilisers from reaching farms across the world.
Adding to the concerns, Qatar’s energy giant QatarEnergy has reportedly halted urea production due to disruptions in gas supplies. This has already pushed gas prices in Europe up by nearly 40% overnight.
Countries most at risk
A report by Dow Jones has identified 15 countries where the conflict could trigger severe inflation, political instability and even food shortages. The list includes Pakistan, Afghanistan, Ethiopia, Nigeria and Iraq.
These economies are already fragile and rising fertiliser shortages and higher food prices could create what analysts describe as an ‘existential crisis’ for their governments.
What it means for India
For India, officials say there is some short-term relief. The government currently has adequate stocks of urea to support the upcoming kharif season. Authorities believe the country may not face major supply issues for at least a month.
However, experts warn that the real test will come if the conflict continues for more than six months. In that case, fertiliser shortages could affect the next crop cycle during the rabi season.
At the same time, higher diesel prices are expected to increase the cost of ploughing and irrigation for Indian farmers. This could eventually push up the prices of staples such as wheat flour, pulses and rice in the domestic market.
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