The global economy is once again under pressure from rising geopolitical tensions. After a sharp spike in oil prices triggered by escalation surrounding Iran, markets are facing the risk of a broader inflationary wave. Experts from the Atlantic Council warn that the consequences of this shock will not remain confined to energy markets and could spill over into key sectors such as agriculture and food security.
Disruptions in critical shipping routes, particularly around the Strait of Hormuz, have already pushed oil and gas prices higher. This is increasing production costs across multiple industries, but the most significant spillover risks are expected in agriculture, where both energy and fertilizer inputs are essential. According to the Atlantic Council, such chokepoint disruptions tend to rapidly transmit price shocks across global supply chains.
Modern agriculture is highly dependent on nitrogen-based fertilizers, much of which is produced in and transported through the Persian Gulf region. Any disruption to supply, combined with rising energy costs, quickly translates into higher fertilizer prices. This directly increases the cost of crop production and may lead to reduced yields or even shifts in planting decisions in the upcoming seasons.
Corn is expected to be among the most affected crops due to its high nitrogen and energy intensity. With farmers in the Northern Hemisphere entering the critical planting season, delays or shortages in fertilizer shipments could significantly impact output. Some producers are already considering reducing corn acreage in favor of less input-intensive crops such as soybeans.
Higher grain prices would then cascade through the entire food system. Since corn is a key component in livestock feed, any increase in its price directly raises the cost of meat, dairy, and poultry products. This creates additional pressure on households, particularly lower-income consumers who already spend a large share of their income on food.
The Atlantic Council emphasizes that without deliberate efforts to diversify supply chains, strengthen strategic reserves, and reduce dependence on vulnerable chokepoints like the Strait of Hormuz, the global economy risks moving from one crisis to another. In this context, supply chain resilience is no longer just an efficiency goal—it is a fundamental requirement for economic stability.
