From oil shock to food shock: US-Israel war stares at global fallout

By Iftikhar Gilani

While the world remains consumed by energy security amid the United States–Israel war on Iran, a quieter but potentially more enduring crisis is unfolding.

Food security, long overshadowed by oil markets, is now emerging as a central casualty of the conflict, with ripple effects stretching from the Gulf to South Asia, Africa, and beyond.

In a detailed conversation on The High Top, Caitlin Welsh, director of the Global Food and Water Security Program, lays out how the war is already reshaping global food systems—through fertilizer disruption, rising energy costs, and deepening economic stress.

“One of the things that’s been most missing in coverage of the Iran war is discussion of fertilizers,” Welsh said, pointing to a critical blind spot in global analysis.

The Gulf, despite being one of the most arid regions in the world, sits at the center of global agriculture. “Estimates vary, but it’s 20 to 30% of all fertilizer that is exported through the Strait of Hormuz,” she noted.

The interconnected nature of global food systems means that disruptions in one region quickly cascade across the world.

Welsh underscored this point with striking statistics.

“A major type of fertilizer, urea, up to 50% of exports transit the Strait of Hormuz. One facility in Qatar produces 14% of global exports,” she said.

Such concentration creates systemic risk.

When conflict disrupts these supply chains, the effects are felt globally—from Brazil to Europe to Africa.

Welsh highlighted that prices for one of the main nitrogen fertilizers spiked on March 20 to their highest levels since 2022, when Russia’s invasion of Ukraine triggered a global commodity shock.

“That was a historic period for high fertilizer prices,” she said, warning that the current surge could have lasting consequences for global agriculture.

The implications extend far beyond farms.

“Fertilizer prices are really important to talk about because they’re going to have impacts on crops in the coming months, potentially in the coming years,” Welsh explained. Energy, she added, is the second major driver amplifying the crisis.

“Energy prices affect food prices… to run tractors, to run irrigation, to transport food, to refrigerate food. When energy prices increase, food prices increase.”

This dual shock—rising fertilizer and energy costs—is pushing food prices upward from multiple directions at once.

For wealthier nations, the impact is manageable. For poorer and import-dependent economies, it is destabilizing.

South Asia hardest hit

India, the world’s second-largest population center, depends heavily on imported fertilizers to sustain its agricultural output. A prolonged price surge threatens to raise costs for millions of farmers, especially smallholders who already operate on thin margins.

Government subsidies may soften the immediate blow, but they also strain fiscal resources at a time when economic pressures are mounting.

With high inflation, a weakening currency, and limited fiscal space, Pakistan also has little room to absorb sustained increases in agricultural input costs. Any disruption in fertilizer availability or affordability could reduce crop yields, drive up food prices, and deepen food insecurity.

As food prices rise, poorer households are forced to cut back on consumption. In countries where food accounts for a large share of household spending, even small increases can have outsized effects. Malnutrition, already a concern in parts of South Asia, could worsen.

But the crisis is not confined to production or prices. Welsh pointed to another critical channel of impact: remittances.

“A lot of people are going to be sent home… people will be losing jobs and coming back maybe to rural communities because they’re not working in the Gulf,” Caitlin Welsh said.

In North Africa, Welsh warned, rising costs are colliding with fragile economic structures.

“In countries like Egypt… the cost to the government of subsidizing the food goes up, and the cost of transporting the food in the country goes up,” she said.

Egypt, the world’s largest importer of wheat, is particularly vulnerable.

“Wheat prices are already increasing in Egypt,” Welsh noted, highlighting the pressure on a country where bread subsidies are a cornerstone of social stability.

Attempts to reform these subsidies have repeatedly failed due to political sensitivities.

“There are a lot of poor people in Egypt and a lot of people really do rely on the food subsidies,” she said, adding that the system remains difficult to change despite its high cost.

Tunisia and other North African economies face similar challenges, with rising food and fuel costs straining government budgets and household incomes simultaneously. Even countries with stronger economic buffers are not immune.

Gulf states, Welsh noted, are better positioned to absorb higher food prices due to their financial reserves. But they face their own pressures, including increased defense spending and uncertainty over future energy revenues.

“There’s a psychological impact… an increased awareness of food insecurity and water insecurity,” she said, suggesting that even wealthy states are reassessing their vulnerabilities.

Ukraine war

Welsh drew parallels with the Ukraine war, which forced countries to scramble for alternative fertilizer sources and disrupted food supply chains worldwide.

“Conflicts in one region can have impacts around the world,” she said, noting how even distant markets were affected by changes in supply and trade patterns.

The current conflict is triggering similar adjustments, but in a more fragile global environment.

Countries are competing for limited supplies, driving prices higher and exacerbating inequalities between rich and poor nations.

Humanitarian efforts are also under strain.

“High energy prices make it more costly to deliver humanitarian assistance,” Welsh said, warning that aid operations are becoming more difficult at a time when they are most needed.

Disruptions to coordination hubs in the Gulf are further complicating relief efforts, particularly for regions already facing food insecurity. Despite these challenges, Welsh offered a measured assessment of the risks.

“Not necessarily,” she said when asked whether people would starve as a direct result of the war.

But she cautioned that the conflict is making an already difficult situation worse.

“What I think is that it will be more difficult to provide assistance… in some parts of the world,” she said, emphasizing that the war is compounding existing vulnerabilities rather than creating them in isolation.

The South Asian region is already grappling with climate stress, including erratic monsoons, heatwaves, and water scarcity. Rising fertilizer and energy costs reduce farmers’ ability to adapt, making agricultural systems more vulnerable to shocks.

The result is a compounding crisis.

Each factor—war, energy prices, fertilizer disruption, declining remittances, and climate stress—reinforces the others, creating a feedback loop that is difficult to break.

India’s public distribution system provides a degree of protection for vulnerable populations, while Pakistan has attempted to manage prices through subsidies and import controls. But these measures are costly and often unsustainable in the long term.

The broader lesson, Welsh suggested, is about the fragility of global systems.

“We hadn’t appreciated the extent to which the entire global food chain is linked to a tiny strip of the Persian Gulf,” she said. That realization is now coming into sharp focus.

The war in the Gulf is not just an energy crisis. It is a global food crisis in the making. And for South Asia, the stakes are immense.

As fertilizer prices climb, fuel costs rise and remittance flows weaken, millions of households across India and Pakistan are facing a squeeze that threatens both livelihoods and nutrition.

Food security rarely commands the urgency of energy politics.

But as Caitlin Welsh’s analysis makes clear, it may ultimately prove to be the more consequential story—one measured not in barrels of oil but in the cost of bread, the resilience of farmers, and the ability of nations to feed their people.