Agricultural
The Hormuz Strait Energy Hub
The blockage of the Hormuz Strait has increased the price of natural gas in Europe by 39% in 24 hours, with immediate repercussions on agricultural production costs. The closure of 20% of global maritime traffic has disrupted the flow of essential fertilizers for the production of corn, wheat, and soybeans. This event is not an isolated incident, but a stress factor that exposes the structural fragility of global food chains.
According to a report by Food Navigator, 19% of global natural gas exports and 34% of oil exports transit through this route. The resulting surge in energy costs has already hit the wheat market, with futures fluctuating between 12% and 18% lower than in March 2025, despite production costs increasing by 22%.
The Dynamics of Energy Constraints
The energy crisis has amplified existing tensions in the agricultural sector. The price of agricultural diesel has risen to €1.85/liter, an increase of 43% compared to 2024. This has a direct impact on distribution costs, with maritime transport accounting for 37% of the total cost of food exports. The closure of the Hormuz Strait has highlighted that 4% of global cereal traffic passes through this route, a critical factor for exporting countries such as Ukraine and Argentina.
The The Conversation report emphasizes that 20% of global fertilizer trade (ammonia, phosphates, sulfur) transits through the Strait. This has caused a 65% increase in the production costs of nitrogen fertilizers, resulting in a 14% reduction in the average yield of corn fields.
The Physical Limit of Food Chains
The critical threshold lies in the ratio between energy availability and agricultural production capacity. With the price of natural gas exceeding €40/MWh, the production cost of nitrogen fertilizer has risen to €1,200/ton, making the use of optimal dosages economically unsustainable. This has led to a 22% reduction in fertilizer use in Europe, resulting in a 9% reduction in the average yield.
The DW report highlights that 30% of food imports to the Gulf countries pass through this route. The closure has caused a buildup of 12 million tons of fertilizers in the Gulf ports, with an average delay of 28 days in transport. This has generated a 45% increase in storage costs and a 15% reduction in the availability of fresh agricultural products.
Implications for Decision Makers
For an investor in agricultural assets, the marginal risk associated with energy volatility has risen to 0.85, exceeding the sector benchmark. The buffering capacity of food chains has decreased by 33%, with the average recovery time from external shocks increasing from 90 to 120 days. This requires a recalibration of investment strategies, with a focus on assets with low energy content and high self-sufficiency.
According to Klim, the traditional financial model does not include the implicit energy cost in agricultural production. This creates an information asymmetry that overestimates expected returns by 18-22%. To mitigate this risk, it is necessary to introduce thermodynamic efficiency metrics in valuation models, with a focus on indicators such as the energy-investment ratio (E/I) and the energy cost per unit of biomass produced.
Photo by Cai Fang on Unsplash
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