Will the Gulf war trigger a global food crisis? Here’s why the scare is still some distance away

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. Of course, the usual caveats apply to the US and Israeli war on Iran: a prolonged or broader conflict would upend all kinds of market assumptions. For now, though, the situation isn’t like 2022, when Vladimir Putin’s forces attacked Europe’s bread-basket, turning farmland into a battlefield.

At the time, Russia and Ukraine together accounted for a quarter of the world’s wheat and barley exports, roughly 15% of our corn, and nearly half of all sunflower seeds.Instead of fertile land, this Gulf war is being fought over deserts and a strip of sea. For central bankers worrying about rising fuel costs, it’s a welcome difference. The stability in farming offers an important reprieve on inflation.

Four years ago, supermarket buys pushed up prices for households. So far this time, our grocery bills are steadier. Since the war started, wheat and corn prices have risen a mere 4%.