CSIS: How the US-Iran War Could Trigger a Global Food Crisis?

Author: Caitlin Welsh, Director of the Global Food and Water Security Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C.; Source: CSIS; Compiled by: Carbon Chain Value

The energy and fertilizer market disruptions triggered by the Iran war are threatening global agricultural markets and food prices. How will these market shocks affect food systems? What evidence have we seen so far, and what policy solutions are available for American and farmers and consumers around the world?

Q1: How exactly is the Iran war affecting agricultural markets and food prices?

A1: The war with Iran is affecting food systems through two mechanisms: energy prices and fertilizer prices, both of which have been driven higher by damage to energy production infrastructure and the effective shutdown of the Strait of Hormuz.

There are several reasons why high energy prices translate into high food prices. From tractors and irrigation systems to transportation and refrigeration, energy—including fuel oil and liquefied petroleum gas—powers every stage of food production and processing. High energy costs faced by farmers, food shippers, and retailers are passed on to consumers through higher food prices. In addition, as fossil fuel prices rise, demand increases for alternative energy sources, including biofuels. This prompts some farmers to shift crops such as corn, sugar, and soybeans toward energy production rather than serving as staple food. Finally, high energy prices increase fertilizer costs. Liquefied natural gas (LNG) is a key input for nitrogen fertilizers, so higher LNG prices push up the prices of fertilizers such as ammonia and urea. And higher oil prices raise processing and transportation costs, ultimately adding upward pressure to all fertilizer prices.

Besides high energy prices, the war with Iran is also directly raising fertilizer prices by restricting the export of fertilizers and fertilizer production inputs. Before this war, roughly 20–30% of global fertilizer exports passed through the Strait of Hormuz, including about 23% of ammonia and 34% of urea (the most commonly used nitrogen fertilizer), as well as 20% of global trade in phosphates. The strait also carries about 20% of global LNG exports and about 45% of global sulfur exports; sulfur is a byproduct of oil production and is used to produce phosphate fertilizers.

Taken together, higher oil and LNG prices, increased costs of fertilizer feedstocks, and limits on fertilizer exports are raising the costs of most global nitrogen and phosphate fertilizers. Farmers in the Northern Hemisphere—including in the United States—are now facing higher fertilizer costs during the spring planting season (the fertilizer peak). Farmers may respond in several ways. Farmers who purchased fertilizer before the outbreak of the war may continue planting according to their original plans. Countries that maintain national fertilizer reserves, such as China, may draw on these reserves to supply farmers with fertilizer, shielding them from high fertilizer prices. Farmers with insufficient fertilizer reserves may be forced to buy at high prices or simply forego fertilizing. Ultimately, this could affect crop yields and change decisions about what crops to plant; some farmers may shift from higher nutrient-demand crops (such as corn) to lower nutrient-demand crops (such as soybeans). Combined, these decisions may alter both the quantity and quality of agricultural commodities in global markets, potentially increasing food costs for many people.

Q2: How will the Iran war affect farmers and food prices—in the United States and worldwide?

A2: The direct impact of high fertilizer and energy prices on the U.S. agricultural economy is likely to be greater than their impact on U.S. food prices. By late 2025, the Agricultural & Applied Economics Association (Agricultural Bureau?) issued a warning that “the survival and development of the U.S. agricultural sector” is under threat from economic pressure. These pressures include trade and immigration policies, which increase the costs of farm equipment and labor; fertilizer prices that remain above pre-pandemic levels; and declining prices for agricultural products. As a result, for many farmers, sale prices for agricultural products fall below production costs. Today, the U.S. Department of Agriculture (USDA) estimates that about 25% of farmers have not yet purchased the fertilizer they need for the 2026 spring planting season. Higher fertilizer prices add to these farmers’ costs, which could affect their ability to stay in operation.

Globally, high energy prices may put upward pressure on world food prices. Considering the correlation between energy prices and food prices, and assuming the war lasts beyond June 2026 and oil prices remain above $100 per barrel during that period, the United Nations World Food Programme (WFP) estimates that the number of people facing severe hunger could increase by 45 million. The final figure will depend on how long the closure of the Strait of Hormuz lasts and on whether policies are implemented that buffer the war’s impact on farmers and consumers.

Direct effects may show up first in the Northern Hemisphere, especially for farmers in major agricultural producing countries such as the United States, Canada, Europe, Russia, Ukraine, China, and India. Sustained high fertilizer prices could likewise affect agricultural production in Southern Hemisphere countries during the late-2026 planting season, and could even affect the Northern Hemisphere’s 2027 spring planting season, depending on the duration of the war and the level of elevated fertilizer prices. Sustained high energy prices could further lead to grain being diverted to produce biofuels rather than being used as food, which would put upward pressure on grain prices. Since grain is the primary source of animal feed, higher grain prices would ultimately affect dairy and meat prices while also affecting staple food prices.

Q3: What evidence so far indicates that the war is affecting agricultural markets and food prices?

A3: As of the time of writing, global urea futures have touched $693 per metric ton, up 49% compared with prices before the outbreak of the conflict. Prices vary by location; on March 20 in Illinois, the average urea price was up 42% from pre-war levels, while the average ammonia price rose 18.5%. Gasoline and diesel prices in the United States have continued to rise; by the end of March, the national average gasoline price exceeded $4 per gallon.

In March 2025, the USDA Economic Research Service projected that prices for all food in 2026 would increase by 3.6%. This would represent higher inflation compared with 2024–2025, but lower than the food price inflation in 2020 driven by COVID-19-related supply chain shocks, and lower than 2022, when food prices reached a four-decade high. Monthly reports will reveal the extent of U.S. food price inflation—specifically for food purchased at grocery stores and restaurants. The Food and Agriculture Organization of the United Nations (FAO) Food Price Index will report the month-to-month changes in global agricultural commodity prices. The World Food Programme (WFP) estimates that the impact of energy prices on food prices could peak about four months after the outbreak of the Iran war; within a similar time frame, food prices are expected to reflect the elevated U.S. energy prices.

The USDA’s “expected planting report” estimates that in 2026, the planted acreage of corn and wheat (both are nitrogen-intensive crops) could fall by 3% each compared with 2025. Soybean acreage is estimated to increase by 4% compared with 2025. The fluctuations in expected planted acreage have not been as dramatic as grain traders had projected; this may be because the report did not capture the full impact of high fertilizer prices on U.S. farmers (the survey was conducted during the second week of March), or because most farmers had already secured fertilizer supplies early.

Globally, the effects of high fertilizer and energy prices will also be felt in the coming months, depending on the duration and scope of the war. FAO estimates that one month of conflict would affect farmers in the Southern Hemisphere who have not yet purchased fertilizer, while farmers in the Northern Hemisphere would be relatively less affected. Three months of war could affect production and planting decisions of all farmers in both hemispheres. If the war extends into 2027, it could affect the growth trajectory of economies, thereby affecting agricultural productivity and consumers’ purchasing power. Estimates for global agricultural commodity production and exports will be covered in the monthly “USDA World Agricultural Supply and Demand Estimates” reports and in reports from the Agricultural Market Information System.

Q4: What are the policy responses?

A4: Recognizing the additional pressure the Iran war is placing on U.S. agriculture, the White House announced March 24, 2026, as National Agriculture Day and, a few days later, welcomed hundreds of farmers to the White House grounds. There, President Donald Trump announced several measures to support American farmers, including raising the required volumes of biofuels in renewable fuel standards, providing loan guarantees for farmers and food suppliers, and easing pollution monitoring requirements.

These steps may lower overall costs and expand markets for farmers, but they cannot address the surge in fertilizer prices caused by the Iran war. In the short term, easing tariffs on fertilizer-producing countries such as Morocco and Russia can help relieve high fertilizer prices. U.S. fertilizer market analysis suggests increasing domestic nitrogen fertilizer production to lessen the impact of global price shocks on U.S. farmers, although building fertilizer facilities would require billions of dollars and up to two years. Ammonia production facilities driven by renewable energy could deliver ammonia at costs relatively lower than ammonia produced using LNG; therefore, in the long run, funding research and investment in such facilities could reduce fertilizer prices for U.S. farmers. Investigating whether fertilizer producers have potential price-manipulation behavior could also signal an intention to lower fertilizer prices, but it might not affect near-term fertilizer prices for U.S. farmers.

In addition to impacts on U.S. farmers, because energy costs continue to rise, all U.S. consumers may face food-price inflation. According to USDA data, through 2024 food insecurity had been increasing, affecting 13.7% of U.S. federal households. High food prices and economic stagnation could increase the number of Americans experiencing food insecurity in 2026. The “One Big Beautiful Bill Act” mandates a historic reduction in funding for the Supplemental Nutrition Assistance Program (SNAP)—the federal program that supports household food security—which will cause millions of Americans to lose SNAP benefits. If food prices rise alongside energy prices, temporarily increasing SNAP funding could buffer low-income Americans against food insecurity.

To support producers and consumers worldwide, FAO recommends short-term measures to stabilize markets and ensure the flow of energy; mid-term measures to diversify fertilizer supply and strengthen regional cooperation among fertilizer-importing countries; and long-term measures to improve the resilience of fertilizer markets to structural shocks, such as a closure of the Strait of Hormuz.

Q5: Can the “Black Sea Grain Initiative” model be used for fertilizer transport through the Strait of Hormuz? Would it work?

A5: In late March, the UN Secretary-General announced the formation of a working group, modeled on the Black Sea Grain Initiative (BSGI) and similar mechanisms, to “facilitate fertilizer trade through the Strait of Hormuz, including the movement of raw materials.” After Russia’s invasion of Ukraine and the blockade of the Black Sea in early 2022, Ukraine’s grain exports were effectively trapped in Ukrainian ports, driving global food prices to record highs before March 2022. In mid-2022, the UN, Turkey, Russia, and Ukraine agreed to the BSGI to enable the safe export of Ukrainian grain from Ukraine’s Black Sea ports. Ukraine’s grain exports resumed immediately, helping calm global food prices, which fell by the end of 2022 back to pre-invasion levels.

Today, the UN and other international partners may hope to curb the increase in global fertilizer prices through similar mechanisms. The impact of a Strait of Hormuz initiative would depend largely on the commodities covered—whether urea, ammonia, phosphates, LNG, and/or sulfur. Since nitrogen fertilizers are the most widely used fertilizers globally, and much of the urea and ammonia are produced in the Gulf states, an initiative designed to facilitate the transport of these fertilizers could lower global prices and mitigate the long-term effects on global food production and prices. Including LNG in any trade-facilitation scheme would further reduce fertilizer prices. Including sulfur and phosphates in the Strait of Hormuz mechanism would allow the maximum reduction in fertilizer prices. Even so, an initiative that does not facilitate oil exports would allow energy prices—and the prices of food, fertilizer, and other commodities—to continue facing upward pressure.

Although the BSGI ultimately helped stabilize global grain prices and facilitated large-scale seaborne exports of Ukrainian grain, it created other challenges for Ukrainian exporters. In discussions around the BSGI, people often overlook a fact that runs counter to common expectations: Ukrainian grain exports increased after the 2023 termination of the BSGI. This is because the initiative required inspections of grain-carrying vessels entering and leaving Ukrainian ports, including inspections by Russia. During the BSGI period, Russia slowed down and ultimately stopped inspections of Ukrainian ships, and then the BSGI was fully terminated in mid-2023. Without the BSGI inspection regime, together with renewed commitments to ensure the safety of its maritime trade routes, Ukraine ended up increasing its grain exports in the year after the BSGI was terminated.

In the case of the Strait of Hormuz, Gulf fertilizer and natural gas producers would financially benefit from the facilitated fertilizer and LNG exports, and easing pressure on farmers could support global food production. However, Iran may find it beneficial both to profit from participation in such a制度—sending goodwill signals to Gulf states after attacks across Iran’s region—and to benefit by retaining control over Strait of Hormuz exports, preserving leverage over the United States, Israel, and the global economy. By the end of March, Iran announced its agreement to “promote and expedite” the transit of humanitarian aid supplies through the Strait of Hormuz. The war reduced operations at a humanitarian aid hub located in the United Arab Emirates, delaying the delivery of food, medicines, and medical supplies to Africa and Asia.

One lasting lesson of the BSGI is that one party to a mechanism may be interested in continuing to control commodity exports even while appearing broadly cooperative on trade facilitation; and ultimately, until the war ends, trade volumes may not fully recover.

Q6: What unintended consequences could exist for the United States’ geopolitical rivals?

A6: New trade dynamics brought by the Iran war have already benefited the United States’ strategic rivals, including Russia and Iran. Beyond the two countries’ oil exports—on which the U.S. lifted sanctions within weeks of the war’s outbreak—Russia and Iran are also benefiting from the disruption in fertilizer and natural gas markets.

During the Strait of Hormuz export interruptions, fertilizer orders are increasing from Russia—the world’s second-largest fertilizer exporter—including from some African countries. This dynamic helps Moscow’s efforts to use food and fertilizer exports as tools of influence, forcing importing countries to think twice about condemning Russia’s war in Ukraine. At the Strait of Hormuz, Iran reportedly allows ships loaded with goods to transit to countries closely connected with Iran. For example, India has already received imports of at least six shipments of liquefied petroleum gas (typically used as cooking gas) from Iranian ships passing through the strait; according to reports, China has also received shipments of goods via the strait. According to one Indian shipbroker, Iran is “forcing countries to choose between aligning with the West and energy stability.” A minister from the United Arab Emirates said that weaponizing the Strait of Hormuz to gain political influence is “global extortion.”

Just as in the Ukraine war, high energy prices are driving global inflation, and high fertilizer prices threaten food production for billions of consumers worldwide. In wartime, this provides additional leverage and creates further effects on fertilizer-importing countries.