Everyone Is Watching Oil — But the Food Crisis May Be the Bigger Shock

Added: 2026-05-12

[00:00:00]Everyone is watching oil prices.

[00:00:02]Everyone is watching gas prices.

[00:00:04]Everyone is watching the Strait of Hormuz because they know it's one of the most important shipping routes in the world. But there is another crisis building underneath the surface and it may end up hitting ordinary families in a very direct way. This is not just about petrol. This is not just about energy bills. This is about food. More specifically, it is about fertilizer.

[00:00:25]And if fertilizer becomes too expensive, too scarce, or too difficult to access, then farmers across Europe could face a much bigger problem because fertilizer is one of the hidden foundations of the modern food system. It helps crops grow.

[00:00:41]It helps farms produce enough food. It helps keep yields high. And when the price of fertilizer jumps, the cost of producing food jumps with it. That is why this story matters. The EU's fertilizer crisis is not just a farming story. It is a supermarket story. It is a household budget story and it could become one of the next big drivers of food inflation. The warning is already being sounded. According to the Guardian, fertilizer shortages caused by the Iran war have already driven up costs for UK farmers by as much as 70%.

[00:01:19]That's a huge increase. And the reason this matters for Europe is simple. The UK is not the only place exposed to global fertilizer markets. European farmers also depend on fertilizer, natural gas, imported raw materials, and global shipping routes. So when a major choke point like the Strait of Hormuz is disrupted, the impact does not stay in one country. It spreads through energy markets. It spreads through shipping markets. It spreads through agriculture and eventually it can spread into the price of bread, milk, meat, vegetables, and everyday groceries.

[00:01:59]Fertilizer shortages caused by the Iran war have driven up costs for UK farmers by up to 70% and will have a dramatic impact on food prices globally next year, according to one of Britain's most powerful property and farming companies.

[00:02:17]Mark Preston, executive trustee of the 349-year-old Grosvenor Group, controlled by the Duke of Westminster, said fertilizer was already quite expensive before the 50% to 70% surge in prices since the start of the Iran war in late February. The effective closure of the Strait of Hormuz, which Iran's Islamic Revolutionary Guard Corps said on Wednesday could soon reopen, has throttled global supplies of fertilizer crucial to growing food crops. That is the key point. This is not a small increase. This is not a normal seasonal rise in farming costs. A 50 to 70% jump in fertilizer prices changes the calculation for farmers. It means some farmers may delay buying. Some may buy less. Some may switch what they plant.

[00:03:11]Some may take the risk of using less fertilizer and hoping yields do not fall too sharply. But, farming does not work like a tap that can simply be turned on and off. Decisions made today can affect harvest months from now, and that is why the timing matters. The food price impact may not show up immediately. It may arrive later when lower fertilizer use starts to affect the amount of food being produced.

[00:03:38]Take a look at this clip from Bloomberg, where John Denton, the Secretary-General of the International Chamber of Commerce, explains why the Strait of Hormuz crisis is not only about oil and gas, but also about fertilizer, food, and the real economy.

[00:03:55]I mean, I'm working on the Strait of Hormuz at the moment, because one of the issues there, and I think people are starting to realize that, the Strait of Hormuz is actually not just a combat the two of you combatants between US and Iran, it's also framed very much in oil and gas, but people are forgetting or not seeing yet what which is one of the most important elements is a crisis which is emerging around access to fertilizer.

[00:04:19]Yeah. Now, we're in 170 countries, I think as we've discussed before, and we see very quickly in the real economy the impact of an access issue. So, we've got not just a pricing issue, so a pricing cost issue, we've also got challenge to actually get get access to the product itself. So, you've got the combination of a price shock and a supply shock, which is about to create a huge cataclysmic problem in the real economy, but in particular on food. And we saw this with the Black Sea. Because we we So, we developed the Black Sea agreement for the UN Secretary-General, and we see similarities there. Because food pricing, the access to food, the inability to feed yourself, that's what gave rise to the Arab Spring. That's actually what causes political instability. So, That clip is important because it explains why the story is bigger than energy. Denton makes the point that people are framing the Strait of Hormuz mainly through oil and gas, but the fertilizer issue may be just as serious. And he uses two words that matter, price shock and supply shock. A price shock means the product becomes more expensive. A supply shock means the product becomes harder to get. When you have both at the same time, farmers are squeezed from both sides. They're not just asking, "Can I afford this?"

[00:05:38]They're also asking, "Can I even get it?"

[00:05:42]That is where the danger becomes much more serious for the EU, because Europe can absorb some price increase for a while, but if supplies become unreliable, that puts real pressure on farmers, food processors, retailers, and consumers.

[00:05:59]Preston said that although UK crops were unlikely to be affected this year as most fertilizer had already been used, the knock-on effect could arrive next year.

[00:06:10]"Farmers are not buying that fertilizer.

[00:06:13]They're sitting on their hands and hoping things will improve, which they probably won't," he said.

[00:06:19]The multi-billion pound company owns one of the UK's leading farms, a dairy and arable holding in Cheshire, England, as well as rural estates in Lancashire and Scotland, plus swaths of Mayfair and Belgravia in central London.

[00:06:36]This is why the crisis may feel invisible at first. Food prices do not always react instantly. A supermarket shelf can look normal while the pressure is building further back in the chain.

[00:06:47]Farmers may already be making different decisions. They may already be delaying purchases. They may already be planning for lower input use next season, but consumers may not notice until much later. That is how food inflation often works. It starts with energy, then it moves into fertilizer, then it moves into farming costs, then it moves into wholesale prices, then it reaches retailers. And finally, it reaches families at the checkout. By the time the public finally sees the problem, the decisions that caused it may have been made months earlier.

[00:07:27]For the EU, this matters because the block has already been through a painful lesson on energy dependence. Europe knows what happens when gas prices surge. It knows what happens when industries that rely on energy suddenly face higher costs. Fertilizer production is deeply connected to natural gas, especially nitrogen fertilizer. So, if gas flows are disrupted, if LNG markets are stressed, or if fertilizer shipments are delayed, this can feed into farming costs very quickly. And the problem is that food is not optional. Families can cut back on holidays. They can delay buying a car. They can reduce spending on clothes. But, they cannot stop buying food. That is why food inflation is so politically dangerous. It hits everyone, but it hits lower-income households hardest.

[00:08:20]Take a look at this clip from Bloomberg where Denton explains that this is not just a market story. He says this is a real economy issue because farmers are already changing what they plant based on whether they can access fertilizer or afford it.

[00:08:36]This detachment between the market and the real economy. Oh, yeah. And what I was describing consequence of the detachment was these are real economy issues. These are not market issues. So, ultimately, we need to work out a way to get the fertilizer flowing again. We've already lost capacity. And that capacity is meaning that farmers in Africa and Latin America, cuz they couldn't get access to fertilizer or the price of it was too high, what are they doing?

[00:09:02]They're actually replanting without fertilizer or not planting, >> [music] >> which means yields are going to suffer.

[00:09:08]That section matters because it shows the problem is already moving from theory into reality. This is not just traders speculating on prices. This is about farmers making practical decisions in the field. If fertilizer is too expensive, farmers may replant without it. If fertilizer is not available, they may not plant at all. And if yields fall, there is less food coming out of the system. And that creates pressure, not only in Europe, but across the world. And when global food supplies tighten, Europe is not protected. Even wealthy regions feel the impact when global markets are stressed.

[00:09:47]Prices rise, imports become more competitive, poorer countries suffer first and hardest, but European consumers still feel it.

[00:09:56]It's going to be a very very dramatic problem for the world, not just the UK, in terms of food, just because so much fertilizer comes through those straits, Preston said. But farmers can probably do more spring cropping next year, rather than winter cropping. So they've got a little bit more flexibility. The magnitude of the increase in food prices will depend on when the Strait of Hormuz, an important shipping passage where about 1,600 vessels are stranded, opens again.

[00:10:30]This is where the EU angle becomes very clear.

[00:10:34]If the Strait of Hormuz remains disrupted, Europe is not only dealing with higher energy costs, it's also dealing with the possibility of higher food production costs. And that creates a difficult problem for policy makers.

[00:10:48]If food prices rise again, central banks may worry about inflation. Governments may worry about household anger. Farmers may demand support. Retailers may face pressure not to pass on costs. But if businesses cannot absorb higher costs forever, at some point someone has to pay. And most of the time that someone is the consumer.

[00:11:11]This also comes at a very bad time.

[00:11:14]European households have already lived through years of rising prices. Food bills have already taken a bigger share of family budgets. People are tired of being told that inflation is temporary, only to see another shock appear.

[00:11:29]First it was the pandemic, then it was the Ukraine war, then it was energy.

[00:11:34]Now, it may be fertilizer. And this is why the story is so important. It shows how fragile the global food system really is. A conflict in one region can affect shipping. Shipping can affect gas. Gas can affect fertilizer.

[00:11:49]Fertilizer can affect crops. Crops can affect food prices, and food prices can affect politics.

[00:11:57]Take a look at this clip from Bloomberg where Denton explains how uncertainty is now changing global commerce. He talks about geopolitics, supply chains, and why businesses are becoming more hesitant to trade across borders.

[00:12:12]Well, I mean, what you articulated can be wrapped up in one concept. It's the level of uncertainty, which is actually really compounding. I think we talked about this before. The uncertainty that business finds, and not just in the US, but on a global basis, as I said, we're we're everywhere. We're seeing a level of inhibition towards engaging in commerce across borders cuz people just don't know what the rules are. There's no policy settings. And then you've got the complication, I think, of the geopolitical side feeding into the geoeconomic side where, you know, the disputes. Where's the multilateral system? Where are the institutions that are actually supposed to be able to be used here in these environments? So, it's not clear to people. We actually did an economic >> Where are they? Why aren't they working?

[00:12:57]Why isn't there that respect anymore?

[00:12:59]>> Well, in the end, one of the challenges for the institution is actually the willingness of their members to member states to do something. I was just in Yaoundé at the WTO ministerial meeting.

[00:13:09]And if there's one takeaway from that, is that the idea of consensus-based multilateralism is over.

[00:13:16]Um what you're going to see much more is coalitions of the willing, pluralateral, these sorts of issues because you do not have alignment between a lot of the major players. And that is the problem, and that actually makes it very difficult for the institutions to function. The institutions have got a lot to answer for anyway.

[00:13:33]That clip helps explain the wider picture. The fertilizer crisis is not happening in a stable world. It is happening in a world where countries are already becoming more protective.

[00:13:44]Governments are thinking about security.

[00:13:46]Companies are thinking more about supply chains. Farmers are thinking more about whether they can get the inputs they need.

[00:13:55]And when everyone starts protecting their own interests, global trade becomes more uncertain.

[00:14:02]That uncertainty can make prices worse because businesses do not know what rules they are operating under. They do not know whether the supplies will move freely. They do not know whether governments will intervene. And when uncertainty rises, costs usually rise with it.

[00:14:23]Preston said, "The concern is at least as much, if not more, around food and fertilizer than it is around oil because there are alternative sources of oil.

[00:14:34]There aren't very many alternative sources of nitrogen for the production of fertilizer."

[00:14:40]These straits closure has cut off flows of liquefied natural gas, an important input for nitrogen-based fertilizers such as urea.

[00:14:50]The impact on Grosvenor will be limited, Preston added, "because the organization does not use much fertilizer and relies on cow dung where possible."

[00:15:00]This gets to the heart of the issue. Oil is serious, but there are alternative sources. They may be expensive, they may be difficult, but the world has more flexibility with oil than it does with some fertilizer inputs. Nitrogen fertilizer is not something farmers can simply replace overnight. Organic alternatives like manure can help some farms, but they cannot replace the scale of modern fertilizer use across Europe.

[00:15:27]And not every farm has access to enough manure. Not every crop can be managed the same way. Not every farmer has the same flexibility. So, when nitrogen fertilizer becomes expensive or scarce, the pressure becomes real.

[00:15:42]And this is why Europe should be paying attention now, not later. Because if the fertilizer the shock hits the next planting cycle, the food price impact could arrive when households are least prepared for it.

[00:15:57]The EU has spent years trying to reduce its vulnerability to energy shocks, but food security is now part of the same conversation. It is not enough to talk about gas storage, oil prices, or shipping insurance. Europe also has to talk about fertilizer supply, farming costs, crop yields, and how quickly those costs move into supermarkets.

[00:16:22]So, the headline is simple. The EU's fertilizer crisis is about to hit food prices. Maybe not all at once, maybe not tomorrow morning, but the pressure is already building.

[00:16:33]Farmers are already facing higher costs.

[00:16:35]Global trade routes are already under strain. Fertilizer access is already being disrupted, and experts are already warning that the consequences could show up in food prices next year.

[00:16:49]This is the part of the crisis that many people are not watching closely enough.

[00:16:53]They are watching the oil price. They are watching the gas market, but the bigger shock may come through food.

[00:17:00]Because when farmers cannot afford to feed the soil, the rest of us may eventually pay more to feed our families.