1. Fertilizer will be growing headaches for farmers
With headlines focused mainly on oil and gasoline prices, Ag operators have an even bigger headache brewing around fertilizer prices. The Middle East conflict has turned the Strait of Hormuz into a no‑go zone for commercial carriers, severing the critical flows of gas, sulfur and urea that underpin global nitrogen and phosphate production.
A third of the world's fertilizer is shipped through the straight. Equally problematic is that the spike in global gas prices has led to shuttering of fertilizer production in other regions, as input costs (gas!) are too high for them to remain profitable. A month into the conflict, container and tanker volumes through Hormuz have plunged, and natural gas prices in Europe have more than doubled. As a result, U.S. retail prices for nitrogen based fertilizers (urea and anhydrous) have spiked, just as the Northern Hemisphere planting windows begin. Farmers will respond by modifying acreage and application rates, shifting more acres to Soybeans rather than the more nitrogen-hungry Corn. Knock‑on effects point to higher prices for feed and ethanol as Corn supply in the Fall will be tighter.
Insurance and risk management keys:
Insurance insights: While cargo and stock-throughput rates have been dropping in the current insurance cycle, War rates in the Middle East are on the rise, with further cost increases driven by longer time-in-transits due to re-routing. Carefully review relevant coverage clauses around war, delays, and re-routing.
Moves to consider: Hedge risks and delays by adding suppliers from safer regions and splitting volumes across multiple vessels if the gulf region cannot be avoided.
Read more from the New York Times here (opens a new window)
2. We just can't catch a break with inflation
As 2026 kicked off, it was starting to appear that the FED had pulled of the "perfect landing", having carefully turned up the dial on interest rates to tame inflation, while also avoiding a painful recession. Uncertainty roared back in late February as the Iran war began, with a multitude of economic consequences refreshing concern around inflation and affordability.
Oil prices are the most consequential and obvious factor at play here. With so much crude oil now locked into the Persian Gulf, European/Brent and US/WTI crude prices have both popped above $100/barrel. U.S. gasoline prices have surged above $4/gallon on average, a metric that will put pressure under headline CPI with each passing day. Shipping is amplifying the shock, as carriers are rerouting (adding ~10–15 days), layering on war‑risk surcharges, and even suspending some bookings, with the net effect being a sharp uptick in shipping costs over the last month. Fertilizer price spikes (see story above) will cascade through farms and to grocery stores, adding an additional pinch on consumers. The macro-economic impact is straightforward: higher energy, freight and farm inputs will re‑accelerate inflation and raise the odds the Fed stays higher for longer—or even hikes interest rates later in 2026. This shift is already reflected in futures markets, and it adds up to a rising chance of a recession.
Insurance and risk management keys:
Check to ensure cargo coverage limits are adequate in light of broadly increasing values being shipped. Be aware of policies with rate adjustments built in, and budget for those higher premiums.
Explore and educate on the tools available for hedging your interest rate exposures. Lockton will facilitate those discussions and any trades would go through a third party.
Read more from the CNBC Here (opens a new window)
3. Packing costs will hit food and beverage producers.
With oil prices over $100 on Hormuz disruptions, energy and petrochemical feedstock prices are rippling through the resins, films, and utilities that underpin food & beverage packaging and processing. Meanwhile, ocean shipping costs are soaring (see story above). For packaging buyers, that cocktail means higher prices for bottles, closures, films and labels, as well as longer/less reliable lead times, and a greater risk of actual stock-outs. The backup plan for the global energy supply chain is to keep Saudi energy flowing via pipes to the Red Sea, but this route is also at risk as broader regional tensions flare entering the 5th week of this war.
Logistical tensions will have impacts beyond just petrochemicals, and into related important commodities like aluminum and helium. The operational takeaway is a massive and potentially sustained headache for packaging procurement teams.
Insurance and risk management keys:
Cross check any critical packaging SKUs to single‑source suppliers and lanes, then line up alternates outside Gulf/Red Sea risk. Negotiate surcharge‑indexed price/lead‑time clauses, split lots across sailings, and raise declared values/aggregate limits to reflect higher freight, bunker fuel, and inventory‑in‑transit exposures.
Read more from the PackagingDive here (opens a new window)
4. What happens if energy prices don't fall back?
If crude and natural gas prices don’t retreat soon, the war shock ceases to be a historical blip, and becomes a standing tax on the food‑ag value chain and the broader economy. Here is what we know:
Crude oil: With Hormuz traffic near a standstill, a durable price risk premium will sustain as flows are rerouted and insured at higher costs. Saudi barrels pushed through the East–West pipeline to Yanbu can partially offset Gulf outages (up to ~25% of the missing Gulf barrels), but also add a second chokepoint in the Red Sea. If the war stopped tomorrow, prices may drop back to pre-wary levels plus 10-20%.
Natural gas: The strait normally carries ~19% of global LNG, and early March saw a +74% jump in European benchmark gas prices as flows seized. Damage to critical production infrastructure is more serious on the Nat Gas side, particularly to the Ras Laffan gas field which is the largest in the world. It is too early to predict how long repairs will take, but prices are likely to land significantly higher than pre-war levels even after the violence ends. This means sustained tightness will keep ammonia/urea feedstocks expensive, stressing fertilizer prices, as well as power markets. Industrial demand will no doubt take a hit, especially in import‑dependent regions.
Insurance and risk management keys:
Prices for crude oil and natural gas, as well as their byproducts downstream, do have hedging solutions to smooth out your volatility. The time to do this of course is before a massive global disruption, but we still face massive uncertainty moving forward and Lockton can help you understand those dynamics and execute hedges via our partners if it makes sense for you.
Read CNBC on what the big oil/gas bosses think (opens a new window)
5. Risks around Hormuz have been growing for decades.
The closer of the Straight of Hormuz is one of the highest impact stories to the global commodity markets in history. If this war doesn't simmer down soon, the global economy will suffer serious consequences with lasting impacts on supply chains.
Read more here on a few gift articles from NYT (opens a new window) and WSJ (opens a new window).
Got an idea for a trending story you would like to see covered?
Please send it in! mbohmbach@lockton.com (opens a new window)
