Francisco Martin-Rayo explains to readers of the WSJ how the war with Iran will constrain the supply not only of oil and gas but of food.

The closing of the Strait of Hormuz has cut the flow of fertilizer from the Gulf to the world.

The strikes on Ras Laffan then halted the movement of liquefied natural gas feedstock, which powers fertilizer manufacturing in those countries that might otherwise compensate for the Gulf’s missing output of fertilizer.

1. The Strait of Hormuz was effectively closed beginning 28 Feb, day one of the war.
2. On March 18, Iranian missiles struck Ras Laffan Industrial City in Qatar.

In these two cases, media coverage focused on petroleum prices. That framing, warns Martin-Rayo, is dangerously incomplete.

Some 50% of globally traded urea, the nitrogen fertilizer that underpins nearly half of global food production, originates in the Gulf and transits the strait.

QAFCO: Qatar’s State Fertilizer Co.

• QAFCO operates the single largest urea production site on earth, with annual output of 5.6 million metric tons or about 14% of global supply.
• QAFCO production has been offline since 4 March.
• Russia, the next-largest supplier, already faced export restrictions before the first missile flew.
• China restricts exports aggressively to protect its own supply.

The market, not finding an alternative, is repricing the shortage, with urea at the New Orleans hub rising from $516 a ton to $680 in less than a week after Feb. 28, with credible forecasts above $800 if the closing extends through May.

Timing is the cruelest part. Last week, Martin-Rayo spoke with a grain grower in Australia, a country that imports 70% of its urea from the Gulf region. The grower’s operation has access to about 15% of what it needs (planting season is weeks away). There is no viable source to fill the gap. The grower was describing a physical absence, mind you, not a price problem.

That same conversation, in different languages about different crops, is being replicated from the Punjab in India to Italy’s Po Valley and Brazil’s Cerrado. In the U.S., too, farmers face rising costs, though not a shortage because of domestic production.

We must assume it will take six months in the Strait of Hormuz to return traffic to normal. At Helios AI, Mr. Martin-Rayo predicts global food prices will rise 12% to 18% above precrisis levels by the end of 2026 and even higher in the first half of 2027 before stabilization becomes possible.

This scenario reflects three sequential shocks.

1. shock is already here, brought on by the rising cost of energy and logistics, which is affecting every stage of food production, from diesel-powered irrigation to refrigerated freight.
2. shock will arrive in the third and fourth quarters of 2026, when spring planting shortfalls materialize in grain and oilseed harvest data.
3. shock will begin in early 2027, as grain stocks drawn down in 2026 go unreplenished because this year’s harvests fall short. This is where price pressure stops being cyclical and starts being structural.
   Compounding Supply Shock

Compounding all three, continues Mr. Martin-Rayo, is a risk that futures markets aren’t adequately pricing.

“When a different supply shock caused food prices to spike in 2022, Serbia, Hungary, India, Indonesia and Argentina all restricted key food exports within months of each other. Each decision was individually defensible as domestic policy. Collectively, they removed supply from global markets when the world needed it most. The conditions are ripe for this to happen again in 2026: Price signals are sharper, political pressure is higher, and governments have learned that export restrictions work as a short-term tool even when they are economically destructive over the longer term. That cascade isn’t in most procurement scenarios I come across. It should be.”

Availability Is Key

What distinguishes these crises from every supply shock the food system has absorbed before is availability.

Price shocks mean wheat, corn, and soybean meal still can be sourced. Yes, it costs more, yes, margins are compressed. But cost is passed to the consumer.

Physical unavailability, Mr. Matin-Rayo reminds consumers, means the cargo doesn’t exist to be purchased at any price. “Spot markets that normally clear within days go weeks without offers because no one is selling. The question isn’t whether the damage will happen. It already is.”