Oil above $100 fuels surge in global agricultural prices

Monday 09 March 2026 - 16:00

By: Dakir Madiha

Oil above $100 fuels surge in global agricultural prices

Agricultural markets rose sharply Monday as crude oil prices climbed above $100 per barrel, driven by the escalating conflict involving Iran and disruptions to energy supply routes. The surge in oil prices has triggered ripple effects across global food markets, increasing fertilizer costs and boosting demand for crop-based biofuels.

Futures contracts for major agricultural commodities moved higher as traders reacted to tightening supply conditions. Wheat prices jumped more than 4 percent, reaching their highest level since June 2024. Soybean futures climbed to levels not seen since May 2024, while palm oil continued a strong upward trend that began earlier in the week.

Market analysts say the rally reflects two simultaneous pressures affecting farmers worldwide. Higher energy costs are pushing fertilizer prices upward, increasing production expenses for growers. At the same time, elevated oil prices are encouraging greater demand for vegetable oils as alternative energy sources in biodiesel production.

A major factor behind the disruption is the closure of the Strait of Hormuz, a critical shipping route for energy and fertilizer exports. The blockage has disrupted shipments from key producing countries in the Middle East, threatening global fertilizer availability at a crucial time for farmers preparing spring planting.

According to The Fertilizer Institute, roughly half of global urea exports originate from countries west of the Strait of Hormuz and pass through the waterway. The same route handles about half of the world’s sulfur exports, another key component in fertilizer production. Saudi Arabia, one of the world’s leading phosphate exporters and the primary phosphate supplier to the United States, has also seen its export routes affected by the disruption.

Fertilizer prices have already reacted to the supply shock. Urea prices at the port of New Orleans jumped roughly $70 per ton within days of the conflict’s escalation. Transactions that had been occurring around $470 per ton quickly moved above $550, according to data cited by StoneX.

In Egypt, urea prices increased by as much as 13 percent to around $550 per ton, according to market data from the CRU Group cited by Reuters. Analysts warn that the timing of the supply disruption could not be worse for farmers preparing for spring planting.

Agricultural economist Brent Stiles said many farmers had already delayed fertilizer purchases due to tight profit margins. Shipping delays could now worsen the situation. A vessel loading urea in the Persian Gulf today would not reach farms in the United States until May, according to fertilizer analyst Josh Linville. That timeline could leave farmers short of nitrogen fertilizer during the critical early growing season.

The oil shock is also driving increased demand for crop-based fuels. Soybean oil futures at the Chicago Board of Trade reached 65.74 cents per pound on March 5, the highest level since July 2023. Prices extended gains as Brent crude traded above $104 per barrel.

Palm oil markets are experiencing a similar surge. The price gap between palm oil and diesel fuel on the Bursa Malaysia exchange narrowed by 44 percent in a single week, making biodiesel production significantly more profitable. Analysts say the shrinking spread between palm oil and diesel has become a major driver of investor interest in vegetable oil markets.

Palm oil prices gained about 8 percent during the week ending March 6 and continued rising as crude oil prices strengthened.

Economists warn that these market movements could translate into higher global food prices in the coming months. The United States Department of Agriculture had already forecast a 3 percent increase in food prices in 2026 before the conflict began.

If fertilizer shortages persist, farmers may adjust planting decisions. Some analysts expect growers to shift acreage from corn, which requires large amounts of nitrogen fertilizer, toward soybeans, which require less fertilizer input.

Additional pressure could emerge from trade policy responses. Reuters reported that China may tighten controls on fertilizer exports in response to the crisis, a move that would further constrain global supply.

Energy analysts say the broader implications of the conflict could reshape commodity markets if disruptions persist. Helima Croft, an energy strategist at RBC, warned that prolonged instability could eventually halt production in parts of the Middle East, creating a deeper shock across both energy and agricultural markets.