The expanding military conflict involving Iran, the United States and Israel is sending shockwaves through global commodity markets, disrupting agricultural trade flows and maritime logistics across the Middle East.
Heightened tensions have intensified security risks in the Strait of Hormuz and adjacent waterways, a corridor critical not only for crude oil but also for grains, oilseeds, fertilizers and other bulk commodities. Military activity and reported attacks on commercial vessels have forced shipping companies to reassess operations, with several major global container lines pausing transits or rerouting vessels away from high-risk zones.
he Joint Maritime Information Center has raised its regional security posture to “critical,” reflecting active kinetic threats in the area. Ebrahim Jabari, a senior adviser to the Iranian Guards commander-in-chief, said in a statement, “The strait (of Hormuz) is closed. If anyone tries to pass, the heroes of the Revolutionary Guards and the regular navy will set those ships ablaze,” This has tightened the operational environment significantly, with shipments delayed or diverted.
Seaborne Agri Trade Through Suez and Hormuz
The fallout is particularly significant for agriculture. Roughly 13-15% of global seaborne grains and oilseeds and about 20% of ocean-traded fertilizers move through the Suez Canal, while the Strait of Hormuz handles a substantial share of crop nutrient shipments. Any prolonged disruption threatens to slow trade flows of corn, soybeans, wheat, sugar and animal feed ingredients, while also complicating fertilizer supply chains at a time when farmers are already grappling with elevated input costs.
Fertilizer markets face particular vulnerability. The Gulf region hosts some of the world’s largest production hubs, and a significant share of globally traded crop nutrients transits through Hormuz. Any bottlenecks could tighten availability and amplify logistical constraints for importing countries.
Corn markets are closely watching Brazil’s export prospects, as Iran has been a major buyer of Brazilian corn. A sustained trade interruption could complicate allocation of supplies from the world’s second-largest corn exporter. Wheat markets, meanwhile, have seen volatility as investors reposition amid uncertainty over shipping risks.
Soybean oil futures surged to multi-year highs earlier in the week, supported by rising crude oil prices and renewed attention on biofuel demand. At the same time, uncertainty surrounding US-China relations has clouded prospects for soybean trade, given China’s role as the world’s largest soybean buyer. Prolonged geopolitical strain could delay or disrupt planned agricultural purchases.
War-risk Insurance Policies Now Essential
The insurance industry has responded swiftly. Leading maritime mutual insurers, including several members of the International Group of Protection and Indemnity Clubs, have announced the withdrawal of war-risk cover for vessels entering the Persian Gulf and nearby waters. The decision follows similar cancellations by reinsurers and reflects mounting difficulty in pricing exposure in an active conflict zone.
War-risk policies, typically purchased separately from standard marine insurance, are essential for ships entering high-threat areas. With major insurers stepping back, shipowners may face sharply higher premiums or limited access to coverage, discouraging new cargo loadings in the short term.
Industry estimates suggest marine hull insurance rates in the Gulf could rise by 25% to 50% in the near term, with sharper increases possible if direct attacks on merchant shipping escalate. Some Asian insurers have also scaled back underwriting for war risks in waters surrounding Iran and Israel.
The cumulative impact of rerouted vessels, higher insurance costs and mounting geopolitical uncertainty is adding a “war premium” across energy and agricultural markets. Traders are increasingly reacting to military developments as much as to traditional supply-and-demand fundamentals.
With key maritime corridors under strain, global agricultural supply chains face a period of heightened volatility, where logistics, insurance and geopolitics may prove as decisive as crop production itself.