By Scout Nelson
While recent ceasefires have eased immediate tensions, conflict in the Middle East continues to threaten energy and fertilizer markets that are critical to U.S. agriculture.
The region is a major source of oil and fertilizer materials. During the clash between Israel and Iran, Brent crude oil prices surged by 15–20% before dropping after the ceasefire. Similarly, fertilizer prices spiked sharply. Urea prices jumped by 20–40% in just a few days, reflecting the volatility triggered by unrest.
“Any disruptions to energy markets can translate into higher costs for farmers and ranchers for diesel, gasoline, and other energy sources used for machinery and equipment, for transporting crops and livestock, and for drying crops,” said Daniel Munch, economist with American Farm Bureau.
The U.S. fertilizer market is also vulnerable. Around 25% of the total fertilizer used in the U.S. is imported. The country depends heavily on international suppliers for 97% of its potash, 18% of nitrogen, and 13% phosphate. Key suppliers include Middle Eastern countries such as Saudi Arabia, Egypt, Israel, Jordan, and Qatar.
Josh Linville, Vice President of Fertilizer at StoneX, emphasized how rapidly market reactions can occur due to conflict. Price shocks can impact availability and budgeting for the entire growing season.
The events echo past global disruptions, including the pandemic, supply chain fires, and the war in Ukraine. These “black swan” events show how quickly international crises can create economic stress on the farm.
The Economist magazine reports that one-third of ceasefires in the Middle East since 1989 have failed. This keeps the outlook uncertain. With the global nature of agriculture, producers are encouraged to remain alert and prepare for possible supply disruptions.
Photo Credit:pexels-karolina-grabowska
Categories: Nebraska, Energy, Government & Policy