World markets may face a sharp rise in food prices due to disruptions in shipping in the Strait of Hormuz. The blocking of this strategic route is already affecting the supply of energy and fertilizers, creating serious risks for the global agricultural sector.
This is reported by the Financial Times.
About one-fifth of the world's oil and gas exports pass through the strait, as well as a significant share of fertilizer shipments. Their deficit could lead to lower yields and a further rise in food prices.
Pablo Galante Escobar, Head of LPG at Vitol, warned of the risks:
"We are living in debt. This is not a sustainable solution, otherwise the energy crisis will turn into a food crisis."
After the US and Israeli strikes on Iran, demand for gas from industry dropped by 40%, which particularly hit the production of ammonia, a key component of fertilizers, he said.
The logistics disruption has already caused congestion on alternative routes, including the Panama Canal, where ships have to wait up to 40 days to pass. As a result, the cost of grain transportation in some areas has increased by 50-60%.
Louisa Follis, Director of Clarksons' Dry Cargo Analysis, notes that large oil companies are willing to pay millions for fast passage of routes, while farmers do not have such opportunities.
Traders warn that the market underestimates the scale of the problem. Vijay Chakravarthy, Chief Risk Officer of Louis Dreyfus Company, emphasized:
"The market has not taken into account longer outages. No one is ready for them."
Additionally, the market is not prepared for longer disruptions.
An additional risk factor is the shortage of sulfur, an important raw material for fertilizer production, which is now actively used by the steel industry. Experts also warn against a possible panic by governments, which may begin to accumulate food reserves, which will further push prices up.
The countries that depend on food imports may suffer the most from the potential crisis.
Recall that the world's largest condom manufacturer may raise prices by 20-30% due to the war in Iran.
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