Middle East conflict strains costs and global agricultural supply chains, Rabobank warns
RaboResearch, the market research division of Rabobank, reports that the partial closure of the Strait of Hormuz, the world’s most important oil and gas passage, is critically impacting global food and agribusiness costs for consumers and industries alike.
In a March 12, 2026, report titled Conflict in the Middle East: Impact on Global Food and Agribusiness, analysts state that the shutdown of traffic through the waterway on February 28 has driven up prices for oil, gas, and refined fuels, and translated into higher production, transportation, and logistics costs globally.
The situation in the Middle East has created a “multi-layered” risk environment, with short-term volatility and potential long-term structural effects on prices, margins, and supply chains in the agri-food sector.
Rising tensions increase pressure on fertilizers and agricultural costs
One of the most immediate impacts of the US-Israeli strikes on Iran has been felt in the fertilizer market. Between 25 percent and 30 percent of global nitrogen exports pass through the Strait of Hormuz, where activity has been significantly reduced to zero, triggering sharp price increases.
According to the Raboresearch report, during the first week after the partial closure, urea prices in North Africa rose by nearly 20 percent, while natural gas prices in Europe increased by close to 70 percent.
Given that fertilizers account for between 40 percent and 50 percent of variable costs in grain production, this surge is widening the gap between farmers’ costs and revenues, putting pressure on growers’ pockets worldwide.
The report also warns of major logistical disruptions. Airspace restrictions and maritime rerouting are not only driving up transit times and freight costs but also insurance premiums.
Increases of up to $4,000 per container have already been reported on some routes, directly impacting the final cost of products such as frozen meat.
At the same time, Gulf countries—which import around $90 billion in food—could face supply challenges, forcing exporters to redirect shipments to other markets.
Impact on grains, proteins, and fresh products
In the case of grains and oilseeds, the impact of the Middle East conflict has been slight but marked by increased volatility and higher transportation costs.
For animal proteins, the outlook is more complex. The Middle East is a key importer of meat and dairy products, so trade disruptions are leading to inventory buildup in exporting countries and downward pressure on local prices.
For fruits and vegetables, although the region does not represent a large share of global trade, rising energy, transportation, and other associated costs will have cross-cutting effects across the industry.
Higher energy prices are also affecting key sectors such as packaging. The region is a significant supplier of petrochemical raw materials used in plastics, so any disruption could lead to shortages and higher costs.
Meanwhile, energy-intensive industries such as paper, glass, and greenhouse production are facing higher operational costs, which could translate into additional inflationary pressures on food.
Inflation risk, weaker consumption, and a global shock with lasting effects
Rabobank warns that in a prolonged high-energy-price scenario, global inflation could intensify, reducing consumers’ purchasing power.
The report states that if Hormuz remains shut for an extended period, inflation in the US would likewise run above three percent, triggering additional price increases for consumers and putting further pressure on food processors, which the firm says are already struggling.
In a webinar on how the Middle East conflict is reshaping global commodity markets, Rabobank’s Senior Energy Strategist, Joe DeLaura, said that, despite International Energy Agency (IEA) nations releasing oil into the market to mitigate the impact, this is only a temporary solution.
“There's still a six-million-barrel-a-day deficit while the reserves are being used, and it does nothing to affect the five million barrels a day of stranded refined products,” he added.
This would likely lead to shifts in consumption habits, with a move toward lower-cost products and reduced demand for food services, further squeezing industry margins.
DeLaura says diesel prices won’t return to pre-war levels anytime soon, if ever.
“It's going to take a long time for the diesel market to ever return to normal, if that's even possible,” he explained. “Only if the Strait of Hormuz gets opened at some point, and you start to see the free flow of oil again, that's going to take time. You also have to then see the Gulf Coast refineries restart their operations after repairing any damage, which, again, takes time. All of this points to structurally higher prices for 2027 and 2028.”
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