Are We Headed for Another Food Price Crisis?

An old commodity-trade adage is that the Middle East “sells hydrocarbons to buy carbohydrates.” The desert states send out their oil and natural gas, and in comes wheat and rice. There are a few things produced in the Gulf, however, that are crucial to global food production: nitrogen fertilizer such as urea and ammonia, and the gas used to make them.

So the war in Iran — and its blockage of the Strait of Hormuz waterway — has prompted warnings about another bout of global food inflation similar to the one that followed Russia’s invasion of Ukraine. Despite such fears, the agricultural market isn’t at risk today, at least in the short term. The price of oil might have been soaring but the world’s plentiful food stocks are acting as a balm on commodity prices.