The World Bank’s chief economist has warned that an escalation of conflict in Iran could trigger a global food security crisis, with particular severity for developing nations already grappling with inflation and supply chain disruptions. The warning centres on the strategic Strait of Hormuz, through which roughly one-third of the world’s seaborne oil trade passes, and its critical role in fertilizer production chains that feed global agriculture.
The concern reflects a cascading economic vulnerability: a blockade or serious disruption of the Strait would drive crude oil prices upward, directly increasing the cost of oil-based fertilizer inputs such as ammonia and urea. Since fertilizer is essential to modern crop yields, a sustained price shock would ripple through agricultural systems worldwide, raising food production costs and ultimately pushing staple food prices higher in markets already strained by geopolitical tensions, climate shocks, and post-pandemic inflation.
Iran sits at the fulcrum of global energy logistics. The Strait of Hormuz separates Iran from Oman and connects the Persian Gulf to the Gulf of Oman and Arabian Sea. Any military action—whether a naval blockade, missile strikes on shipping infrastructure, or retaliatory measures—could choke a chokepoint through which approximately 21 million barrels of oil per day flow, according to U.S. energy estimates. For context, that represents roughly 21 percent of global petroleum consumption. A disruption of even a few weeks would create immediate supply shocks; a prolonged conflict could upend energy markets for months.
Fertilizer markets have historically proven volatile during geopolitical crises. When Russia’s invasion of Ukraine in February 2022 disrupted supplies from two major fertilizer producers, global urea prices nearly tripled within weeks. Countries dependent on imported fertilizer—including much of South Asia, sub-Saharan Africa, and parts of Southeast Asia—saw farming costs soar, forcing smallholder farmers to reduce applications or abandon marginal land. Crop yields contracted in several regions, contributing to global food inflation that peaked in 2022 and has receded only gradually.
South Asian economies face particular vulnerability. India, despite being a net exporter of some agricultural products, remains dependent on imports of phosphate and potassium-based fertilizers and energy inputs for domestic production. Bangladesh, with one of the world’s highest population densities and heavy reliance on imported fertilizer, would face acute pressure on rice production—the staple crop for 170 million people—if prices surged again. Pakistan’s agricultural sector, already stressed by recent floods and water scarcity, would confront sharply higher input costs that could devastate smallholder farmers dependent on subsidized or affordable fertilizer. The World Bank’s warning implicitly underscores these regional fault lines.
The broader implication extends beyond agriculture. An Iran conflict would ripple through petrochemicals, plastics production, and transportation sectors globally. Shipping insurance premiums would spike; rerouting tankers around the Cape of Good Hope would add weeks to transit times and substantially increase fuel costs. These cascading effects would inflate the price of manufactured goods, fertilizers, and food products in import-dependent economies. The inflationary pressure would fall hardest on low-income households in developing nations, where food and energy comprise 50-70 percent of household budgets, according to World Bank data.
Policymakers in South Asia and beyond are watching Iran developments closely. India has historically maintained pragmatic relations with Tehran while managing strategic partnerships with Gulf Arab states and the United States; a major conflict would force difficult diplomatic balancing. The World Bank’s warning has already begun circulating among development finance institutions and central banks, signalling that contingency planning for fertilizer supply disruptions is underway at the institutional level. Whether regional governments will bolster strategic fertilizer reserves, negotiate long-term supply contracts, or accelerate domestic production remains to be seen. The next few months will be critical in determining whether the international community can insulate vulnerable populations from the hunger risk the World Bank has now placed squarely on the agenda.
