The Iran war’s economic fallout won’t stop at oil—agriculture and aluminum are next

Four years ago, Russia’s invasion of Ukraine sent Brent crude oil prices soaring. Between December 2021, as concerns over a Russian military buildup mounted, and March 2022, they jumped by around 70 percent. During the same period, wheat prices rose by more than 60 percent, while the prices of platinum, iron, aluminum, steel, palladium, nickel, and coal rose anywhere from 18 to 150 percent between January and March 2022, driving up global inflation.

Today, the global economy is wrestling with a similar conundrum. The US-Israeli attack on Iran has prompted Iran to all but close the Strait of Hormuz, disrupting the safe passage of roughly one-fifth of the world’s petroleum liquids consumption (around twenty million barrels per day) and liquefied natural gas (LNG) supplies. In less than three weeks, Brent crude spot prices have surged by more than 50 percent, triggering significant declines across major equity markets worldwide.

As with the war in Ukraine, however, the economic disruption will not stop at energy markets. Beyond the immediate shocks to oil, gas, and growth projections, tensions in the Strait of Hormuz are poised to ripple through industries closely tied to consumers’ everyday spending. Global agriculture and the aluminum sector, in particular, could feel the effects.

Disruptions in fertilizer supply threaten corn planting and food prices

Modern agricultural systems rely on nitrogen-rich fertilizer, and Persian Gulf nations play a critical role in its production and supply: according to the American Farm Bureau Association and The Fertilizer Institute, the region provides nearly half of the world’s seaborne urea—a key nitrogen fertilizer—and roughly 30 percent of global ammonia demand. Overall, roughly one-third of global fertilizer passes through the Strait of Hormuz, underscoring the region’s importance as a critical hub for modern agriculture.

As shown in the chart below, urea prices have risen by more than 50 percent over the past three weeks. Moreover, LNG accounts for up to 70 percent of production costs for nitrogen-rich fertilizer. The combination of reduced LNG supply and limited fertilizer exports from the Persian Gulf is already causing notable disruptions in global fertilizer availability. This trend is especially concerning as Northern Hemisphere corn producers enter the planting season.

The price shock will hit corn—a highly nitrogen-intensive crop—the hardest, driving food prices up more broadly. With one-third of the world’s corn production located in the United States (see the chart below), American farmers will likely bear the brunt. For them, the spring months are a critical period: most fertilizers, which arrive at US Gulf Coast ports after a thirty- to forty-five-day journey from the Strait of Hormuz, must be ordered by March and applied in April or May.

Due to the de facto blockade of the strait, however, shipments scheduled for April are unlikely to arrive on time, threatening this season’s corn planting and yields. The largest corn-producing states—Iowa, Nebraska, and Illinois—are most vulnerable. Analysts predict that American farmers may shift up to 1.5 million acres from corn to soybeans, a less nitrogen-dependent crop. This, in turn, would have ripple effects on food prices in the United States and globally through 2026 and potentially into 2027.

In the United States, beef prices rose 15 percent in 2025, and overall food prices are projected to climb 3.1 percent in 2026. Because nitrogen fertilizer is a primary input for corn—the foundational feedstock for US beef, dairy, and poultry—prices for these products are likely to climb further. This will place an even greater burden on low-income American households, as the bottom quintile of earners already spend nearly one-third of their disposable income on food, forcing difficult trade-offs between groceries, utilities, and rent.

Developing countries face greater vulnerability to fertilizer supply shocks than wealthier economies. They often lack strategic reserves, subsidy buffers, or the fiscal capacity to protect farmers and consumers when global supply chains break down. Farmers in sub-Saharan Africa are especially at risk, as even modest price increases can make fertilizers unaffordable and jeopardize critical planting seasons.

According to the UN World Food Programme (WFP), an additional forty-five million people worldwide could face acute hunger if the Iran war drags on. By comparison, after Russia’s full-scale invasion of Ukraine in 2022, WFP projected that acute hunger would increase by an estimated forty-seven million.

The aluminum sector faces strain but remains resilient

Beyond energy and fertilizer markets, the aluminum sector—vital to aerospace, automotive manufacturing, construction, consumer electronics, appliances, and furniture industries—is also at risk. After all, Gulf Cooperation Council countries account for about 20 percent of global raw aluminum exports and 8 percent of global aluminum production. 

As a result, aluminum prices initially spiked by roughly 15 percent after the US-Israeli attack on Iran. Since other major aluminum-producing and exporting countries—including Canada, India, Malaysia, Norway, and Australia—have been largely unaffected and are expected to have some spare capacity to partially offset the shortfall, the initial price surge has eased somewhat. As of today, aluminum prices remain about 6 percent above pre-conflict levels.

Still, this increase is expected to be passed on to consumers, inflating the cost of aluminum-intensive goods such as vehicles, aircraft, and household products.

To break the crisis cycle, the world needs diversified supply chains

Over the past five years the global economy has experienced major supply shocks: first the COVID-19 pandemic, then Russia’s invasion of Ukraine, and now the near closure of the Strait of Hormuz. All three shocks highlight the intricate interdependencies of the global economy and its heightened vulnerability to concentrated supply chains—from semiconductors to wheat, energy, and fertilizers—in a single country or region.

If the past five years have shown anything, it is that supply shocks are no longer rare anomalies. Instead, rising geopolitical rivalries and severe climate events have made these disruptions a defining feature of the global economy. Without deliberate efforts to diversify supply chains, invest in strategic reserves, and reduce dependence on chokepoints like the Strait of Hormuz, the world risks cycling from one costly crisis to the next, each more damaging than the last. In other words, building resilient, diversified, and strategically buffered supply chains is no longer a matter of efficiency—it is a prerequisite for global economic stability.

Amin Mohseni-Cheraghlou is a senior lecturer of economics at the American University in Washington, DC, and was a macroeconomist with the Atlantic Council GeoEconomics Center from 2021 to 2024. Previously, he served as a senior advisor at the International Monetary Fund’s Office of Executive Directors and was a research economist and consultant in different departments of the World Bank.

Eduardo Gomez Horta is a graduating senior from the Department of Economics at American University, Washington, DC.

Image: Drone view of a sugarcane field, part already harvested and part with plants. Source: iStock.