Food Prices Soar as War, Weather, and Fuel Combine to Threaten Global Markets
The global food market is bracing for a shock in the second half of 2026 as four major forces converge to amplify each other. The Strait of Hormuz, effectively closed due to the US-Iran war, has led to a significant increase in fertiliser costs. Urea prices more than doubled from around $400 a tonne before the war to over $850 a tonne by April.
The World Bank projects that overall, fertiliser prices will rise 38 per cent in 2026 as a whole, a serious shock, though still short of the 2021-2022 spike. A second force is hitting diesel prices simultaneously: crude and refined products have been squeezed out of the Gulf due to Hormuz's near-closure, while Ukrainian drone strikes on Russian refineries have cut processing capacity to around 60 per cent.
Global food prices are already at their highest level since November 2022. The FAO Food Price Index averaged 133.3 points in August, with wheat, sugar, and vegetable oils tracking higher. The situation is being exacerbated by a strong El Nino, which is forecast to build through the second half of 2026.
Historically, Asia-Pacific countries have borne more of the burden from El Nino than almost any other region. In a comparable past strong El Nino in 2015-2016, South-east Asia lost around 15 million tonnes of rice production. The Philippines, Vietnam, Thailand, and Singapore have already seen diesel prices rise since March.