Global Food Crisis Looms as Hormuz Disruptions Hit Supply Chains

John Denton, Secretary General of the International Chamber of Commerce (ICC), has warned that ongoing shipping disruptions through the Strait of Hormuz pose a direct threat to global food security. According to a statement cited by The Wall Street Journal, the turmoil affecting this vital Middle Eastern shipping route initially caused a shock in the energy sector, and now a worldwide food security crisis is emerging.

Impact on Fertilizer and Grain Markets

Denton highlighted that approximately one-third of the world’s fertilizer supply passes through the Strait of Hormuz. Following the disruption of shipping traffic, available production and supply capacity dropped by nearly 40%. Consequently, the global market lost around 2.7 million tons of products.

The ICC Secretary General noted that grain prices could surge by up to 80% if no progress is made in reopening the strait. Developing economies heavily reliant on imports face the greatest risk. For instance, the Philippines imports nearly 90% of its fertilizer needs, making it particularly vulnerable to these supply chain interruptions.

Natural Phenomena Exacerbate Vulnerabilities

The situation is further deteriorating due to the effects of the natural El Niño phenomenon. As reported by The Wall Street Journal, El Niño may reduce crop yields and increase inflation, compounding the pressures created by the logistical bottlenecks in the region.

Diplomatic Stalemate Hinders Mitigation Efforts

In response to the crisis, the ICC is collaborating with United Nations agencies and the International Maritime Organization (IMO) to develop a mechanism for temporary management of navigation through the strait. This proposed framework involves transferring control of maritime passage to the IMO Secretary General and includes provisions for monitoring, inspection, insurance for vessels, and safe passage rules.

However, implementation of this mechanism is stalled by the lack of an agreement between the United States and Iran. Iranian Foreign Minister Abbas Araghchi had previously presented a seven-day plan outlining steps to halt fighting, reopen the Strait of Hormuz, and resume nuclear talks on the seventh day, contingent on Washington accepting the plan's conditions. US President Donald Trump rejected this proposal.