Skip to main content
Marsh logo

Article

Strait of Hormuz crisis: Downstream SRCC risks in agricultural supply chains

The 2026 US–Israel–Iran conflict has disrupted shipping through the Strait of Hormuz, halting critical fertilizer and liquefied natural gas (LNG) supplies that underpin global agriculture.

03/12/2026 · 4 minute read

The 2026 US–Israel–Iran conflict has disrupted shipping through the Strait of Hormuz, halting critical fertilizer and liquefied natural gas (LNG) supplies that underpin global agriculture. The Persian Gulf handles one-third of the world’s seaborne fertilizer trade and 22% of global LNG exports, both vital inputs for food production. The United Nations has warned that rising food and fuel prices driven by the conflict are pushing vulnerable populations around the world toward greater food insecurity and increasing the risk of social unrest.

Why agriculture is a primary risk

For agriculture, timing is everything. Agriculture operates on a strict seasonal calendar, and the current disruption coincides with the rigid spring planting season. Delays in fertilizer delivery risk missing the narrow fertilization window, potentially reducing crop yields for the entire growing cycle. LNG shortages immediately increase production costs for fertilizer manufacturers, but the failure to deliver finished fertilizer to farmers can lock in reduced agricultural output months later.

Fertilizer shortages can also encourage farmers to plant different, non-food-yielding crops altogether to ensure they have a marketable product come harvest season, which can further reduce food availability.

This dynamic — less food production and more expensive inputs — elevates the risk of strikes, riots, and civil commotion (SRCC) risk. During the 2022-23 global fertilizer and energy supply crisis, reduced fertilizer use in food-scarce countries led to severe domestic food shortages, which materialized as critical physical scarcity and social unrest six to nine months later.

From fertilizer deficit to supply shock

Three factors are driving the current fertilizer deficit:

  1. Shipping disruption: As of March 10, commercial shipping through the Strait of Hormuz remains halted, preventing timely fertilizer and LNG deliveries.
  2. Production curtailment: A major Gulf urea facility suspended output after losing natural gas feedstock, while regional sulphur shortages are tightening phosphate fertilizer availability.
  3. Export controls: China imposed phosphate export restrictions in December 2025 to safeguard domestic supply, expected to remain in place through August 2026. Prolonged disruption in the Middle East may prompt Beijing to extend fertilizer export controls, further tightening global supply.

Analysis from the OECD and FAO underscores the gravity of the potential transition from fertilizer deficit to food supply shock: a prolonged production and shipping disruption could push global food prices up by as much as 13%. For lower-income countries, where food accounts for a large share of household spending, such price increases can be severe.

Elevated SRCC risks

India exemplifies the scale of exposure, sourcing over 40% of its urea and phosphatic fertilizers from the Middle East. Since the Strait’s closure, three fertilizer plants in India have reduced urea production due to LNG shortages.

By cross-referencing the Marsh World Risk Review SRCC data with countries that depend on fertilizer imports and food expenditure metrics, we identify a wider watchlist focused on South Asia and Sub-Saharan Africa. Countries in these regions face acute SRCC risks driven by fertilizer shortages, food price volatility, and economic vulnerability.

The below maps high-risk markets against their modelled SRCC risk, and the share of final consumption spent on food.

Priority SRCC watchlist countries

WRR SRCC: 7.5

Likely SRCC pathways (6-9 months): With ~59% of household expenditure (highest in Africa) allocated to food, fertilizer-driven yield shortfalls and compounding imported rice price volatility could severely erode purchasing power, accelerating protest risk.

WRR SRCC: 7.2

Likely SRCC pathways (6-9 months): Facing a ~37.8% household food expenditure baseline, LNG dependency makes severe inflation across staples possible, straining budgets and raising unrest risk.

WRR SRCC: 6.9

Likely SRCC pathways (6-9 months): With 52.8% of household expenditure (highest in Asia) allocated to food, shuttered domestic fertilizer plants may drive acute rice price volatility.

WRR SRCC: 6.8

Likely SRCC pathways (6-9 months): With elections in June 2026, any food crisis could heighten SRCC risks, escalating tensions and unrest.

WRR SRCC: 6.8

Likely SRCC pathways (6-9 months): High domestic rice price volatility of 1.6 (42.1% of food expenditure), combined with reduced fertilizer application, could strain family budgets, elevating urban SRCC risks.

WRR SRCC: 6.3

Likely SRCC pathways (6-9 months): India relies on heavy domestic support to insulate its market and keep rice price volatility low. Passing upstream LNG costs to farmers threatens to break this fiscal insulation, risking large-scale farmer protests.

Source: Marsh World Risk Review database, February 2026

 

The link between agricultural input disruptions and civil unrest is well established. The 2022–23 food crisis triggered over 12,500 cost-of-living protests across 148 countries, escalating into political crises in Sri Lanka, Pakistan, Peru, and elsewhere. Insured SRCC losses are estimated to have exceeded US$8 billion between 2020 and 2024, dwarfing terrorism-related losses in the same period.

Implications for risk managers

While insurance cannot hedge fertilizer or LNG price volatility, it can protect against the downstream loss events that arise when input shocks escalate into SRCC incidents. Weaker harvests, higher food inflation, and social unrest can expose firms to political violence, business interruption, supply chain disruption, and delayed payments in vulnerable markets.

Marsh is positioned to help businesses structure political violence and related political risk solutions tailored to physical assets, inventory, logistics, and key counterparties in import-dependent countries.

The Strait of Hormuz disruption extends beyond an energy supply issue, it represents a potential SRCC-led risk with secondary implications for credit quality, and cross-border trade flows across fertilizer, agriculture, and food-linked supply chains. If the blockage persists through the spring planting window, reduced fertilizer availability could lead to weaker harvests and higher staple food prices, intensifying SRCC pressures across vulnerable economies. For clients with exposure to these markets, timely risk management is essential to prevent a supply shock from escalating into an insurable loss event.

Marsh is closely monitoring the situation, and we are available to answer questions about risk management strategies, policy coverage, and potential claims.

We invite you to visit our Geopolitical Risk: Middle East Conflict Hub on marsh.com which gathers our current thinking about developments in the region and helpful resources from across Marsh, including forthcoming webinars that may be of interest.

Related insights

Earth photo at night, City Lights of Europe, Middle East, Turkey, Italy, Black Sea, Mediterrenian Sea from space, World map on dark globe on satellite HD photo.Elements of this image furnished by NASA

Article,Featured insight

Geopolitical Risk: Middle East Conflict

03/03/2026
Nightly Earth planet in outer space. City lights on planet. Life of people. Solar system element. Elements of this image furnished by NASA

Article

What’s next for geopolitics in the Western Hemisphere?

02/02/2026
Container yard in busy shipping area

Article

Supply chain trends in 2026

01/27/2026
Container delivery truck at parking lot

Article

The biggest supply chain risks across industries

09/30/2025
View more