The Iran War's Next Shock May Land on the Dinner Table

Fertilizer and shipping disruptions from the Iran war may drive a slower, more persistent rise in food prices than oil shocks alone.

The facts

Fertilizer prices have risen sharply in recent months, with urea up 9.1% to $796.25 per short ton and potash up 6.8% to $571.35 per ton for the week ending October 2, 2026, according to USDA distributor pricing data . These increases follow earlier volatility linked to disruptions in fertilizer trade through the Strait of Hormuz after the onset of the Iran war .

The war in Iran has effectively blocked the Strait of Hormuz, a key chokepoint for global fertilizer and oil shipments, causing a shock to fertilizer supply as American farmers prepare for planting season . Even though most U.S. fertilizer is domestically produced, rising natural gas costs have made American-made fertilizer more expensive, and imported urea prices have risen by close to a third since the conflict began .

Farmers are facing significant financial strain due to these rising input costs. The cost of nitrogenous fertilizer increased by 22% from February 2025 to February 2026, and many farmers report difficulty securing price quotes from suppliers . USDA economists projected that food prices would rise more in 2026 than in 2024 or 2025, and these pressures are expected to ripple through the entire food chain .

Our view

While oil price shocks from the Iran war are immediate and visible, the disruption to fertilizer and shipping is a slower-burning risk that could drive food prices higher for longer. The latest fertilizer price increases, especially in urea and potash, reflect ongoing supply chain stress that may persist beyond the initial energy shock .

The complexity of fertilizer markets—where urea, UAN28, and potash now move independently—means that supply disruptions can create uneven cost pressures for different crops and regions. This divergence, combined with higher freight and energy costs, suggests that the food price impact will be gradual but sustained, rather than a short-lived spike .

Farmers are already struggling with low crop prices, rising debt, and increased equipment and fuel costs, making them less able to absorb further input price hikes. As these costs flow through to consumers, grocery prices could rise steadily, affecting a broad range of food products over time .

The counterargument

Some may argue that fertilizer price volatility is temporary and will ease as new trade flows, such as the reopening of U.S.-Belarus potash shipments and Venezuelan fertilizer imports, help stabilize supply . These measures could offset some of the current upward pressure on input costs.

Additionally, most U.S. fertilizer is produced domestically, which could insulate American farmers from global disruptions over the longer term . As shipping conditions improve and alternative suppliers emerge, the market may adjust, reducing the risk of sustained food inflation.

It is also possible that the recent fertilizer price spikes are partly a result of seasonal factors and regional differences in distribution, rather than solely the Iran war. The supplied sources do not state the precise magnitude of future food price increases, so the long-term impact remains uncertain .

What should happen next

Policymakers should closely monitor fertilizer and shipping disruptions, ensuring that emergency aid and regulatory adjustments are responsive to evolving supply chain risks. This includes evaluating the effectiveness of recent measures such as allowing Venezuelan fertilizer imports .

Agricultural research investments, like the $1.6 million awarded to University of Illinois researchers for studying fertilizer efficiency, should be expanded to help farmers optimize input use and reduce vulnerability to price shocks . These efforts can support both productivity and environmental stewardship.

Farmers and supply chain participants should be provided with timely, transparent market data and guidance to help them navigate volatile input costs. Enhanced information sharing and risk management tools can mitigate the impact of future disruptions and support more stable food prices .