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; Compilation: Carbon Chain Value

Disruptions in energy and fertilizer markets 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 farmers and consumers in the United States and 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 are being driven up by damage to energy production infrastructure and the effective closure of the Strait of Hormuz.

There are several reasons why higher energy prices translate into higher 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. Farmers, food transporters, and retailers pass these high energy costs on to consumers through higher food prices. In addition, when fossil fuel prices rise, demand increases for alternative energy (including biofuels), prompting some farmers to shift crops such as corn, sugar, and soybeans toward energy production rather than serving as staple food. Finally, higher energy prices increase the cost of fertilizer. Liquefied natural gas (LNG) is a key input for nitrogen fertilizer, so higher LNG prices push up the prices of fertilizers such as ammonia and urea, and higher oil prices increase processing and transportation costs, ultimately putting upward pressure on all fertilizer prices.

Beyond high energy prices, the war with Iran is also directly raising fertilizer prices by restricting fertilizer exports and exports of fertilizer production inputs. Before the war, roughly 20–30% of global fertilizer exports transited the Strait of Hormuz, including about 23% of ammonia and 34% of urea (the most widely used nitrogen fertilizer), as well as 20% of global traded 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 make phosphate fertilizer.

Taken together, higher oil and LNG prices, increased costs for fertilizer feedstocks, and restrictions on fertilizer exports are raising the costs of most nitrogen and phosphate fertilizers worldwide. North Hemisphere farmers—including those in the United States—are now facing higher fertilizer costs during the spring planting season (the fertilizer peak period). Farmers may respond in several ways. Farmers who already purchased fertilizer before the war may continue planting as planned. Countries that maintain national fertilizer reserves, such as China, may draw on those reserves to provide fertilizer to farmers and shield them from high fertilizer prices. Farmers with insufficient fertilizer reserves may be forced to scramble to buy at high prices—or simply abandon fertilization altogether. In the end, this may affect crop yields and change decisions about what crops to plant; some farmers may shift from high-fertilizer crops (such as corn) to low-fertilizer crops (such as soybeans). Taken together, these decisions can change 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 around the world?

A2: The direct impact of high fertilizer and energy prices on the U.S. agricultural economy will be greater than their impact on U.S. food prices. By the end of 2025, the National Association of Farm Broadcasters warned that “the survival and development of American agriculture” is under threat from economic pressure. These pressures include trade and immigration policies, which raise the costs of farm equipment and labor; fertilizer prices that remain above pre-pandemic levels; and falling prices for agricultural products. As a result, for many farmers, the selling price of agricultural products is below their cost of production. 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 increase these farmers’ costs, which may affect their ability to stay operational and survive.

Globally, higher energy prices may put upward pressure on world food prices. Taking into account the correlation between energy prices and food prices—and assuming the war continues beyond June 2026, with oil prices remaining above $100 per barrel—the United Nations World Food Programme (WFP) estimates that the number of people facing severe hunger could increase by 45 million. That figure will ultimately 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.

The direct impact may show up first in the Northern Hemisphere, especially for some farmers in major agricultural producing countries such as the United States, Canada, Europe, Russia, Ukraine, China, and India. Persistently high fertilizer prices could also similarly affect agricultural production in Southern Hemisphere countries during the late-2026 planting season, and possibly even during the Northern Hemisphere’s 2027 spring planting season, depending on the duration of the war and the level of high fertilizer prices. Persistently high energy prices may further cause grains to be diverted to produce biofuels rather than used as food, which would put additional upward pressure on grain prices. Because grains are a primary source of animal feed, higher grain prices will eventually affect dairy and meat prices while also influencing staple food prices.

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

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

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

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

Globally, the effects of high fertilizer and energy prices will also be felt in the coming months, and will depend on the duration and scope of the war. FAO estimates that a one-month conflict would affect Southern Hemisphere farmers who have not yet purchased fertilizer, while Northern Hemisphere farmers would be relatively less affected. A three-month war could affect production and planting decisions for all farmers in both the Northern and Southern Hemispheres. If the war continues into 2027, it could affect the growth trajectory of economies, thereby influencing agricultural productivity and consumers’ purchasing power. Estimates regarding 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 policy responses are there?

A4: Recognizing the additional pressure the Iran war is placing on U.S. agriculture, the White House designated 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 requirements for renewable fuel use in biofuels, providing loan guarantees for farmers and food suppliers, and relaxing pollution monitoring requirements.

These steps could reduce overall costs and expand market access 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 mitigate the impact of global price shocks on U.S. farmers, although building fertilizer facilities would require billions of dollars and as long as two years. Ammonia production facilities powered by renewable energy could provide ammonia at a cost 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 engage in potential price manipulation could also send a signal intended to drive down fertilizer prices, but it may have little impact on U.S. farmers’ near-term fertilizer prices.

Beyond impacts on U.S. farmers, as energy costs keep rising, all U.S. consumers could face food price inflation. According to USDA data, up through 2024, food insecurity in the United States had been rising, 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 historic cuts to funding for the Supplemental Nutrition Assistance Program (SNAP)—the federal government’s main program supporting household food security—which will cause millions of Americans to lose SNAP benefits. If food prices rise along with energy prices, temporarily increasing SNAP funding can buffer low-income Americans against food insecurity.

To support producers and consumers globally, FAO recommends short-term measures to stabilize markets and ensure the flow of energy, medium-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 the closure of the Strait of Hormuz.

Q5: Does using a “Black Sea Grain Initiative” model for fertilizer shipments through the Strait of Hormuz work?

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

Today, the UN and other international partners may want to curb the rise in global fertilizer prices through similar mechanisms. The impact of a Hormuz initiative would depend largely on the commodities covered—whether urea, ammonia, phosphates, LNG and/or sulfur. Because nitrogen fertilizers are the most widely used fertilizers globally, and because a large share of urea and ammonia are produced in Persian Gulf countries, an initiative aimed at facilitating the transport of these fertilizers could reduce global prices and mitigate the long-term impacts on global food production and prices. Including LNG in any trade-facilitation framework would further reduce fertilizer prices. Including sulfur and phosphates in a Hormuz mechanism would allow fertilizer prices to be reduced to the greatest extent possible. 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 about the BSGI, a fact that ran counter to widespread expectations was often overlooked: after the BSGI ended in 2023, Ukrainian grain exports actually increased. This is because the initiative required inspections of cargo ships entering and leaving Ukrainian ports, including inspections by Russia. During the entire BSGI period, Russia slowed down and ultimately stopped inspecting Ukrainian ships, and then the BSGI was completely terminated in mid-2023. With the BSGI inspection regime gone—and renewed commitments to ensure the safety of its sea trade routes—Ukraine increased its grain exports in the year after the BSGI ended.

In the case of the Strait of Hormuz, Gulf fertilizer and natural gas producers would financially benefit from facilitated fertilizer and LNG exports, while easing pressure on farmers could support global food production. However, Iran may find it beneficial both to gain from participating in such a system—sending goodwill signals to Gulf states after attacks across Iran’s region—and by retaining control over Strait of Hormuz exports, thereby preserving leverage over the United States, Israel, and the global economy. In late March, Iran announced that it agreed to “facilitate 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 shipment of food, medicine, and medical supplies to Africa and Asia.

A lasting lesson from the BSGI is that a party to a mechanism may be interested in continuing to control commodity exports, even if it appears broadly cooperative on trade facilitation; and ultimately, the volume of trade may not fully recover before the war ends.

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

A6: The new trade dynamics created by the Iran war have already benefited some of the United States’ strategic rivals, including Russia and Iran. Beyond their oil exports—on which the U.S. lifted sanctions within weeks of the outbreak of the war—Russia and Iran are also benefiting from chaos in the fertilizer and natural gas markets.

During the disruption of Strait of Hormuz exports, fertilizer orders from Russia, the world’s second-largest fertilizer exporter, have been increasing, including from some African countries. This dynamic helps fuel Moscow’s attempts to use grain and fertilizer exports as tools of influence, forcing importing countries to think twice about condemning Russia’s war in Ukraine. In the Strait of Hormuz, Iran has reportedly allowed cargo ships loaded with goods to transit to countries closely linked to Iran. For example, India has already received imports of liquefied petroleum gas (typically used as cooking gas) from at least six Iranian ships that transited through the strait; China is also reported to have received shipments of goods via the strait. According to an Indian ship broker, Iran is “forcing countries to choose between allying 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 blackmail.” As with the Ukraine war, high energy prices drive global inflation, while high fertilizer prices threaten food production for billions of consumers worldwide—providing additional leverage during wartime and further affecting fertilizer-importing countries.