Hormuz disruption sends shock through oil and food supply chains

Global supply chain disruptions stemming from the Iran war have escalated, with shipping through the Strait of Hormuz remaining heavily restricted. Between March 1 and April 25, worldwide oil inventories dropped by roughly 4.8 million barrels per day, while urea supplies—critical for agriculture—have been disrupted by nearly 30%, triggering planting cutbacks in Thailand, the Philippines, Bangladesh, and Australia. The United Nations Food and Agriculture Organization (FAO) issued a warning that if shipping routes are not restored before India and Brazil begin major fertilizer purchases in June, the world could face severe crop losses and food inflation akin to the economic shock of the COVID-19 pandemic. Analysts, including Natasha Kaneva of JPMorgan Chase, predict that prolonged disruptions could push Organization for Economic Cooperation and Development (OECD) oil inventories to 'operational stress levels' by June and minimum thresholds by September. Despite an International Energy Agency-coordinated release of 400 million barrels from emergency reserves, the U.S. has only released about 79.7 million barrels of its 172 million pledge. U.S. crude inventories, including the Strategic Petroleum Reserve, have fallen for four consecutive weeks, risking levels not seen since 1982. Meanwhile, damage to Middle Eastern gas infrastructure has pushed urea prices up by 40% since February, with China restricting exports to prioritize domestic supply. Thailand’s agriculture minister warned that attempts to secure Russian urea supplies may fail due to shipping delays, leaving farmers unable to plant during the current season. A rice farmer in Thailand’s Suphan Buri province cited soaring fuel, fertilizer, and plastic costs—estimating production expenses of $33,000 for his 19-hectare farm, with expected revenue of just $22,000. Thailand’s rice exporters have also lost access to Gulf markets, including Iraq, which accounted for 17% of its 2025 exports. In the Philippines, diesel prices in Manila have climbed to 123 pesos per liter ($8.73 per gallon), more than double prewar levels. A farmer in Lian reported that diesel-powered equipment rental costs rose by 25%, cutting his profits in half. The FAO’s chief economist, Máximo Torero, emphasized that prolonged disruptions could worsen crop losses, compounded by a potential super El Niño weather pattern causing drought and extreme heat.