(P1) The Israeli military plans to intensify its attacks on Hezbollah in Lebanon, its chief of staff said on April 5, after confirming that strikes have already killed over 1,000 of the group's militants and fueling further volatility in energy and agricultural markets.
(P2) "Disruptions in fertilizers, urea, and energy supply chains created a food crisis risk deeper than the one that began with the Russia-Ukraine crisis in 2022," Rahmi Incekara, a macroeconomics expert at Istanbul-based Bahcesehir University, said in an interview with Anadolu Agency.
(P3) The S&P GSCI Agriculture global benchmark index has risen approximately 4.1% since the conflict began on Feb. 28, climbing from 345.47 to 368.83 by March 27. The escalation has also pushed the US 10-year Treasury yield to 4.46%, its highest level since July 2025, as investors price in persistent inflation.
(P4) The primary risk is an expansion of the conflict that further disrupts key shipping arteries like the Strait of Hormuz, which is central to the global fertilizer trade. Analysts warn that sustained pressure on energy and food supply chains could trigger a "second-round shock in food prices" and force central banks to delay or reverse expected interest rate cuts.
The conflict is exerting significant upward pressure on global inflation through surging oil and food prices. The effective closure of the Strait of Hormuz, a vital channel for about 39% of the world's seaborne fertilizer trade, directly threatens global food supply security. Countries like Qatar, Iran, and Saudi Arabia account for nearly half of the world's urea exports, which transit through the strait.
Since the conflict's outset, commodity prices have seen sharp increases. In the month following the initial attacks, sugar prices surged 13.7%, cotton rose 7.3%, and corn increased 4.1%. "If no alternative trade routes are found, we won’t be dealing with just more expensive energy prices — the entire chain of fertilizers, feed, grains, vegetable oils, and animal proteins will be under pressure," Zeki Bayramoglu, a professor from Türkiye's Selcuk University, told Anadolu.
Rising energy prices are complicating the fight against global inflation, forcing a hawkish shift in monetary policy expectations. Market estimates that previously priced in two Fed rate cuts by the end of 2026 have been replaced by projections for holds or even potential rate hikes.
"Rises in oil prices are both fueling inflationary pressures and weakening growth dynamics through cost channels that spread across the broader economy," said Hande Sekerci, chief economist at IS Asset Management. She noted that policymakers face a difficult balance, as tightening policy to control inflation could deepen an economic slowdown. The Fed may adopt a wait-and-see approach, but Sekerci believes "the likelihood of the new chair's first move being a hike rather than a cut is on the rise."
This article is for informational purposes only and does not constitute investment advice.
