Iran war shakes energy and commodity markets

The war in Iran is triggering major disruptions across global energy and commodity markets, with prices for oil, gas and key agricultural inputs moving sharply higher. The conflict has led to the closure of the Strait of Hormuz, a central shipping route for oil, gas and critical minerals, curbing tanker traffic and intensifying concerns about extended supply shortages.

Brent crude oil (UKOIL) prices have risen more than 65% above pre-war levels, recently reaching $126 per barrel. This surge reflects fears over constrained exports from producers that rely on the Strait of Hormuz and the broader risk that supply routes could remain impaired while the conflict continues.

The closure of the Strait of Hormuz has severely limited seaborne oil flows, a key factor behind the jump in Brent crude (UKOIL). With tanker movements restricted, refiners and importers are facing tighter availability and higher procurement costs, feeding through into consumer fuel prices.

According to headlines cited from Bloomberg, Iranian officials have linked rising oil prices to what they describe as a blockade associated with the conflict, stating that such restrictions will continue to push oil prices higher. These remarks underscore how geopolitical and policy decisions around Iran and its export routes are being closely watched by energy markets.

Gas prices in Europe and Asia have risen significantly due to the conflict, increasing energy costs for households and industry. The surge is adding to inflationary pressures, as higher gas prices feed into electricity tariffs and industrial input costs at a time when many economies are already grappling with elevated price levels.

Farmers are facing a second sharp increase in fertilizer costs in four years as higher gas prices ripple through production economics. In a related development, Bloomberg reported that India has held domestic jet fuel prices while raising international rates, reflecting how governments and suppliers are adjusting pricing structures in response to higher global energy benchmarks.

The conflict’s impact extends into agricultural markets through both energy costs and direct fertilizer price movements. Urea prices have increased by 50% since the start of the war, a jump that is feeding into higher global food prices and raising concerns about future agricultural yields.

A BBC Business headline highlighted warnings from fertilizer industry leaders that billions of meals could be at risk because of the Iran war’s effect on fertilizer affordability and availability. With farmers confronting steeper input costs, there is growing unease about potential reductions in fertilizer application that could limit crop output.

The closure of the Strait of Hormuz has also led to a near-total disruption in supplies of certain critical minerals, particularly sulfur. Sulfur is an important input for fertilizer production and various industrial processes in the energy and chemical sectors.

This disruption is complicating planning for industries that rely on stable sulfur supplies, adding another layer of uncertainty to markets already dealing with elevated oil and gas prices. The combined pressures on fuels, fertilizers and critical minerals are reinforcing the broad economic reach of the Iran conflict.