---
title: Hormuz Fertilizer and Diesel Shortages Could Hit Food Markets in 2027
description: Daniel Yergin and S&P Global co-authors say Hormuz fertilizer and diesel shortages plus a strong El Nino could produce a global food crisis, felt in 2027.
author: Darie Nani (Editor-in-Chief)
date: 2026-10-23T12:35:14.005Z
updated: 2026-10-23T12:35:14.021Z
canonical: https://www.sovereignmagazine.com/article/hormuz-fertilizer-diesel-global-food-crisis-yergin
image: https://cdn.nanimediahouse.com/pexels-a-farmer-in-kurigram-bangladesh-spreads-fertilizer-on-a-lush-35309638.jpg
categories: Economy
content_type: News
region: Global
publication: Sovereign Magazine
schema_type: Article
---

The [Food and Agriculture Organization's cereal price index](https://www.fao.org/worldfoodsituation/foodpricesindex/en/) rose 5.1% in September from August, according to figures released on October 2, and world maize prices reached their highest level in more than three years. The FAO said worries over fuel, fertilizer and freight costs, with shipping through the Strait of Hormuz still uncertain, added to the rise, especially for crops such as maize that are also used to make biofuel.

Daniel Yergin, S&P Global's vice chairman, and co-authors Shankari Srinivasan, Allan Pickett and Simon Blakey argue in the first major report from the company's new S&P Global Institute, published on October 19, that higher costs for fertilizer and diesel, strong demand for crops to make biofuel and a strengthening El Niño could together produce a global food crisis.

"Farmers buy seed, fertilizer and fuel months before they sell a crop," the authors write. "The squeeze now bearing down on farm budgets may therefore not reach food markets in force until 2027."

> "The world's food producers rely on a steady supply of natural gas and sulfur for fertilizer, diesel for machinery and transport, and open sea-lanes for trade. Conflict is now testing all of them at once, just as El Niño tests the harvest."
> — Daniel Yergin, Shankari Srinivasan, Allan Pickett and Simon Blakey, S&P Global Institute

## About 29% of World Urea Trade Normally Passes Through Hormuz

[Before the US and Israel went to war with Iran on February 28](https://www.sovereignmagazine.com/article/trump-capitulates-iran-peace-plan), about a fifth of the world's oil supply and a fifth of global LNG trade moved through the strait. The authors point out that the Gulf also supplies fertilizer and the raw materials other countries use to make it. In normal times roughly 29% of world trade in urea, the most widely used nitrogen fertilizer, passes through Hormuz, along with nearly half of global sulfur trade and about 21% of merchant ammonia trade.

Fertilizer makers far from the Gulf pay more too, because they depend mainly on natural gas both as a raw material and as fuel, and less LNG is getting through the strait. South Asia is exposed on both fronts, according to the report: India relies on Gulf producers for an important share of the urea it imports, and around 85% of the urea it makes at home depends on LNG. In Bangladesh, four of the country's five urea plants have stopped operating since March because LNG is not available.

## Diesel Cost More Than $100 a Barrel Above Crude in Early September

[Diesel](https://www.sovereignmagazine.com/article/china-economy-iran-war-energy-shock), a major running cost on farms, is scarce even in regions with little exposure to Gulf fertilizer or LNG. The Middle East and Russia normally supply half of the world's net diesel exports. Middle Eastern diesel exports fell by more than half between July 2025 and July 2026, to under 1 million barrels a day, while Ukrainian drone strikes and an export ban have pushed Russia's exports from about 1 million barrels a day toward zero, and China has tightened its limits on exports of diesel and jet fuel. In the first week of September, the gap between the price of a barrel of crude and a barrel of diesel rose above $100, against a historical range of $12 to $20, according to the authors.

"The conflict has driven diesel prices up much faster than crude oil prices, exposing farmers to a sharp increase in operating costs," they write. Farmers in the worst-hit regions will have to buy and apply less fertilizer or may choose to plant fewer acres, they say, and either way less food would be grown.

## Biofuels Became Cheaper Than Oil-Based Shipping Fuel in Europe in September

Expensive oil makes biofuels more competitive with petroleum fuels, which keeps demand high for the crops and vegetable oils used to make them. In September, biofuels were cheaper than oil-based shipping fuels in Europe for the first time on record, the authors write. With that demand strong and backed by government policy, they argue, crop markets have less room to shift back toward food. "Biofuel policy is thus doing more than supporting demand. It is influencing what farmers plant in the middle of an input-cost shock," they write.

## NOAA Expects a Strong to Very Strong El Niño Through March 2027

On October 8, the US National Oceanic and Atmospheric Administration said El Niño was still strengthening and that a strong to very strong event was likely to last through January to March 2027, with sea-surface temperatures more than 4 degrees Celsius above normal in parts of the eastern equatorial Pacific. A strong El Niño would hit harvests just as farmers face higher fertilizer and fuel costs, the report says, leaving crops less resilient to heat and disruptive rain.

## S&P Has Cut Its Brazil Corn and Soybean Forecasts by 6 Million Metric Tons Each

S&P Global has already cut its forecast for Brazil's corn crop by 6 million metric tons to 137 million, and says another 10 million metric tons could be lost if El Niño intensifies. It has lowered its Brazil soybean forecast by 6 million metric tons to 177 million, and a model that factors in El Niño's severity and farmers applying less phosphate puts the probability-weighted harvest at 168 million metric tons. Brazilian soybeans are a major source of feed for livestock in China.

Australia's wheat harvest could fall to 22 million metric tons, against a current forecast of 28 million, S&P estimates. India's rabi wheat crop is at greater risk if the monsoon shortfall continues, after September rainfall came in about 14% below average. S&P puts the downside risk to palm oil output at 5.8 million metric tons in Indonesia and 2.5 million metric tons in Malaysia.

## FAQ

**Q: Are food prices already rising?**
The FAO Food Price Index averaged 136.0 points in September 2026, 1.5% higher than in August and 5.8% higher than a year earlier, though still 15.1% below its March 2022 peak. World wheat prices rose 6.3% in the month to their highest since August 2023, which the FAO linked to Black Sea logistics and dry weather in North America. The FAO's vegetable oil index was 18.3% above a year earlier, and its sugar index was at its highest since April 2025.

**Q: How likely is a record-strength El Niño?**
In its October 8 discussion, NOAA put the chance of an event stronger than any El Niño since 1950, measured as a three-month index reading of 2.5 degrees Celsius or more above normal, at 54% for September to November, 83% for October to December and 70% for November to January. The S&P report notes that temperatures at least 2 degrees Celsius above normal have been reached in only seven episodes since the 1950s.

**Q: Does S&P Global say a food crisis is certain?**
No. The authors write that a global food crisis "is not foreordained", but that it is no longer a distant risk if war keeps impeding the movement of energy and fertilizer and weather cuts harvests across several major producing regions.