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Escalating conflict around the Strait of Hormuz is impacting food and sugar markets.
Disruptions in key maritime routes are increasing costs and delivery times.
IEA considers a record release of oil reserves to stabilise volatile markets.
Rising energy costs triggered by the escalating conflict around the Strait of Hormuz are beginning to ripple across global food and commodity markets, with sugar supply chains among the first to feel the pressure. Higher oil prices and disrupted maritime routes are raising freight, refining and input costs across agricultural commodities, while policymakers scramble to stabilise energy markets amid widening supply disruptions.
While energy markets have drawn immediate attention, the conflict is also tightening global food supply chains. Disruptions to shipping routes through the Suez Canal and the Persian Gulf are forcing cargo vessels to reroute around the Cape of Good Hope, increasing freight costs and delivery times for several commodities, including sugar.
According to Hedgepoint Global Markets, an agri-energy risk advisory firm, the impact on the sugar trade is indirect but increasingly significant as key maritime corridors remain disrupted.
“With the main gateway to the Atlantic basin blocked, shipments from Brazil and Central America, which supply the bulk of regional raw sugar imports, now have to make a longer and more expensive detour around the Cape of Good Hope. The same is true, to a lesser extent, for white sugar exports from Europe, which also use Suez as a more efficient route,” said Lívea Coda, market intelligence coordinator at Hedgepoint.
Rising oil prices are also reshaping sugar market dynamics through biofuel economics. In Brazil, higher fuel prices improve ethanol’s competitiveness relative to gasoline, encouraging mills to divert more sugarcane toward ethanol production, a shift that could tighten global sugar supply and support prices, the firm noted.
The broader economic risk stems from the paralysis of maritime traffic through the Strait of Hormuz, a narrow passage connecting the Persian Gulf to global markets. According to a March 2026 report by the United Nations Conference on Trade and Development (UNCTAD), the waterway normally carries about a quarter of global seaborne oil trade along with significant volumes of liquefied natural gas, fertilisers and petrochemicals.
The report warned that disruptions in the strait are cascading through global supply chains, raising freight rates, insurance premiums and bunker fuel costs. These increases could translate into higher prices for food and other essential goods, intensifying cost-of-living pressures in vulnerable economies.
Many developing countries are particularly exposed. According to UNCTAD, nations already facing high debt burdens and limited fiscal space could see additional strain on public finances as energy, food and transport costs rise simultaneously.
The geopolitical shock has also roiled global oil markets. Prices surged earlier this week amid fears that supplies moving through the Strait of Hormuz, the world’s most critical oil chokepoint, could remain blocked for an extended period.
Brent crude briefly climbed close to $120 per barrel on March 9, 2026 before retreating. On March 11, while West Texas Intermediate crude traded near $88.6 per barrel. Brent is currently hovering around $88–$90 after briefly dropping below $80 earlier this week. The declining prices follows the International Energy Agency (IEA)’s consideration of the largest coordinated release of strategic oil reserves in its history to calm markets. Despite the recent pullback, prices remain roughly 17-20 per cent higher than levels before the conflict erupted on February 28.
According to a report by the Wall Street Journal, the proposed release could exceed the 182 million barrels deployed in two rounds in 2022 as the war between the United States-Israel alliance and Iran enters its second week.
The IEA’s 30 member countries collectively hold around 1.2 billion barrels of emergency reserves, alongside roughly 600 million barrels in mandatory industry stockpiles.
The supply shock is most acute in Asia, which typically absorbs about 80 per cent of the oil exported through the Strait of Hormuz. S&P Global Energy estimates that global crude and refined product supply available to the market has fallen by roughly 17 million barrels per day since February 27.
Initially, the disruption stemmed from tanker traffic being unable to transit the strait. However, production itself is now being affected as storage facilities fill up and producers are forced to shut wells, according to S&P’s latest commentary. Output cuts in Iraq and Kuwait have already reduced regional supply, with Iraq’s southern oil production reportedly falling from about 3.3 million barrels per day to roughly 1.3 million.
Crude oil delivered to Asian markets was already over $100/b last week. Jet fuel and diesel / gasoil prices, which hit record highs around the world during the war’s first week, are arguably under even more stress in Asia.
China and Thailand are restricting product exports, and the list of countries with export restrictions is likely to grow the longer Persian Gulf supplies remain out of the market, accoring to the analysis.
“The first week the crisis was a transportation issue, which could conceivably be resolved quickly. But it is turning into a producibility concern as well due to storage constraints. Re-starting field production of this scale will be a massive technical exercise that could last weeks or more to fully restore output. Downstream and other oil infrastructure damage could potentially limit the pace of recovery of oil flows also, including refined products,” said Jim Burkhard, vice president and global head of crude oil research at S&P Global Energy.
“The longer the Strait of Hormuz remains effectively shut, the worse the impact on physical supplies, inventories and prices, and not just in Asia,” Burkhard warned.
Natural gas markets are also tightening. European gas futures have climbed toward €60 per megawatt-hour amid disruptions to LNG flows, particularly from Qatar, a major exporter whose shipments typically transit the strait.
The consequences are already visible in India, where LPG shortages have begun to affect the hospitality sector. Restaurants in cities including Delhi, Bengaluru, Hyderabad and Mumbai have warned that operations may be disrupted as supplies tighten.
India consumes about 31.3 million tonnes of LPG annually, with roughly 62 per cent imported. Much of that supply normally moves through the Strait of Hormuz, making the country particularly vulnerable to prolonged disruptions.
LPG production domestically has gone up 25 per cent, a senior official from the Union Ministry of Petroleum and Natural Gas told reporters at an inter-ministerial briefing on March 11. India’s nearly 40 per cent consumption of LPG is met through domestic production.
A three-member committee of executive directors from IOCL, HPCL, and BPCL has been constituted to review allocations for restaurants, hotels, and other commercial users, the official added. The committee is consulting with state authorities and industry bodies to ensure fair and transparent distribution.
To ease domestic price pressure, two cargoes of crude oil and another two cargos of LNG is on the way from other routes, the official informed, without sharing details.
To stabilise the market, the government has extended LPG booking intervals from 21-25 days, instructed refineries to increase LPG production and directed oil marketing companies to prioritise household consumers. Authorities are also reportedly exploring alternative supply partnerships with countries including Algeria, Australia, Canada and Norway.
Diplomatic efforts are also intensifying as governments seek to prevent a full-scale energy crisis. News agency Reuters reported that France President Emmanuel Macron is convening a call with Group of Seven (G7) leaders to coordinate responses to the market disruption
For now, markets are closely watching whether the IEA proceeds with its record-scale reserve release. Analysts say such a move could temporarily stabilise prices, but the longer-term outlook will depend on how quickly shipping through the Strait of Hormuz resumes and whether regional production can recover once storage constraints and infrastructure damage are resolved.
If the blockade persists, economists warned that the shock could spread further from energy into food, transport and manufacturing costs, raising inflation risks worldwide.