How does the disruption of the Strait of Hormuz affect global agricultural product prices

LootboxPhobia · 2026-03-28T17:25:17+00:00

Goldman Sachs report warns that disruptions in shipping through the Strait of Hormuz could severely impact global agricultural product prices, especially the nitrogen fertilizer market. Nitrogen fertilizer prices have already risen by 40% due to Middle East conflicts, and shortages will reduce crop yields, affecting supplies across regions. The United States is relatively insulated in the short term, while Europe and other areas face greater risks, which could boost U.S. grain export demand. The report also emphasizes that risks in the commodities market could drive up inflation and drag down the global economy.

LootboxPhobia

2026-03-28 17:25:17

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Investing.com – Goldman Sachs warned in a research report that the impact of disruptions in shipping through the Strait of Hormuz could extend far beyond the energy market, significantly affecting global agricultural prices.

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Goldman Sachs pointed out that the strait is a key corridor for the global nitrogen fertilizer market, with nitrogen fertilizers accounting for about 60% of total fertilizer usage worldwide, which is crucial for crops like corn and grains. More than a quarter of global nitrogen fertilizer trade and about 20% of liquefied natural gas (the main raw material for fertilizer production) typically pass through the Strait of Hormuz, making the supply chain highly susceptible to geopolitical risks.

The report stated that since the outbreak of conflict in the Middle East, nitrogen fertilizer prices have surged by about 40%, reflecting tightening supplies and rising input costs. These disruptions not only limit supply but also increase global production costs, especially in regions reliant on imported liquefied natural gas.

Goldman Sachs noted that a greater risk to the agricultural market may stem from a decline in crop yields, rather than just rising input costs. Fertilizer shortages could lead to reduced yields due to delayed or improper fertilization, while some farmers may shift to crops with lower fertilizer intensity, further tightening grain supplies.

Goldman Sachs added that the impact is expected to vary by region. While the U.S. may be relatively insulated in the short term due to pre-season fertilizer purchases, regions like Europe, Australia, and the Southern Hemisphere may face greater disruptions, potentially boosting demand for U.S. grain exports and driving up global prices.

The firm stated that, from a broader perspective, this conflict highlights the increasing role of commodities as hedging tools against supply shocks and warned that widespread risk exposure in commodity markets could elevate inflation while dragging down global growth.

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