Global food prices projected to rise amid Iran conflict and climate issues

Global food prices are projected to rise significantly due to geopolitical tensions and climate factors. Oxford Economics forecasts an 11.8% increase in food prices in 2026 and a 4.8% increase in 2027, with particular pressure on cereals, fruits, vegetables, and dairy.

The conflict involving the United States, Israel, and Iran has disrupted key inputs, including diesel, natural gas, and fertilizers. The Persian Gulf region accounts for 30% to 35% of global urea exports and 20% to 30% of ammonia exports, while approximately 30% of global fertilizer trade passes through the Strait of Hormuz, which has seen disruptions.

In addition to geopolitical instability, extreme heatwaves and droughts are impacting harvests, particularly in Europe. The FAO and OECD have warned that these combined factors will lead to a decline in agricultural production through 2026 and 2027. The ongoing war in Ukraine also continues to influence global markets, as Russia and Ukraine together account for nearly 30% of global wheat exports.