Potential escalation in Israel-Iran conflict poses risks to food security in Middle East

Any potential disruptions of maritime operations at the Strait of Hormuz could impact imports of agricultural commodities into the Middle East, threatening food security in the region, which is heavily dependent on food imports, experts and traders said June 24.

Following US strikes on Iran's nuclear sites June 22, Iran's move to potentially close the Strait of Hormuz, a slim 33-km passage between Oman and Iran, stoked concerns among agricultural product buyers in the Middle East.

The strait is the only maritime passage from the Persian Gulf to the open ocean, serving as the main export route for key Gulf oil producers, including Saudi Arabia, the United Arab Emirates, Iraq and Kuwait. But it also serves as the main import route for agricultural commodities.

The Middle East Gulf is a major buyer of grains and oilseeds (corn, wheat, barley, soybeans), accounting for about 8% of global seaborne agricultural bulk imports in 2024, according to S&P Global Commodities at Sea data.

Exporters of corn and soybeans in Brazil and Basmati rice from India have already raised alarms about trade with Iran due to rising insurance premiums, stuck payments, and wartime dangers such as the jamming of radios.

As the Strait of Hormuz is a key gateway for grain and food imports into Iran, any disruption there would ultimately hurt Iran's own economy and population the most, according to a Brazil-based analyst.

A ceasefire between Iran and Israel was announced by US President Donald Trump in the early hours of June 24, but both Iranian and Israeli media reported new Israeli airstrikes on Iran.

Food security crisis

The escalating conflict between Israel and Iran adds to the list of clashes that have been attributed to be the primary cause of food insecurity and malnutrition in the Middle East and North Africa region by the UN World Food Program.

A December 2024 report by the UN showed that 66.1 million people, approximately 14% of the population in the Arab region, faced hunger in 2023, adding that food security and nutrition indicators were projected to deteriorate further due to ongoing conflicts coupled with persistent droughts across many parts of the region.

While the wealthier Gulf Cooperation Council countries -- Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE are rated high in the list of food-secured countries, they are not immune to shipping blockades as most of their rice and cereals, and to a certain extent meat and vegetables, are imported, the World Economic Forum said in a February report.

The Middle East is the largest importer of wheat and rice and the second largest importer of corn in the world as a region, data from the US Foreign Agricultural Service showed.

"There is a likelihood that Iran may close up the Strait of Hormuz. However, the blockade may not last very long as it may lead to a bigger conflict with the US," an official with a Switzerland-based grain trading house said June 23.  

Dry bulk (used for carrying agricultural products) isn't hit as hard from the ongoing tensions, but the latest involvement of the US sanctions will indirectly accelerate Chinese purchases of agricultural products from the East Coast South America region, Maria Bertzeletou, senior market Analyst at Greece-based The Signal Group told S&P Global Commodity Insights.

The Iranian parliament has voted for the closure of the strait, but it has yet to be implemented. However, the risk is driving caution, leading to more vessels rerouting through the Gulf of Oman or staying further offshore, Bertzeletou said.

While Iran has threatened to close the Hormuz shipping passage before, it has so far never happened, and market participants said the likelihood of Iran blocking the route remains low due to political and economic considerations.

As of June 15, about 80 vessels carrying agricultural products were seen to be in transit through the Red Sea and Persian Gulf sea routes. These ships were loaded over the past month.

Most of the vessels using these sea routes were coming in from Brazil and Argentina, carrying soybeans, sugar, corn and soybean meal.

Brazil's corn exports to Iran at risk

Iran has been a significant importer of Brazilian corn this year, accounting for an average of 12% of Brazil's total corn exports over the past five years, importing around 4.3 million mt annually.

Year-to-date, Iran has imported 1.4 million mt of Brazilian corn as of June 23, CAS data showed.

This accounts for 24% of Brazil's corn exports, making Iran the leading destination for Brazilian corn in 2025.

Iran's seaborne agricultural imports have fallen since an all-time high of 19.1 million mt in 2022, with purchases dropping 38% in 2024, according to CAS. About 43% of imports in 2024 were corn, mostly shipped from Brazil.

According to analysts at Commodity Insights, rising tensions between Israel and Iran could potentially dampen Iran's demand for Brazilian corn as Brazil's export season nears.

India's rice exports stranded

Nearly 100,000 mt of basmati rice shipments bound for Iran have been stranded at Indian ports as the ongoing Israel-Iran conflict continues to disrupt maritime logistics and insurance coverage, the All India Rice Exporters Association said June 23.

India is the largest exporter of Basmati rice, with nearly 1 million mt exported annually from India to Iran, according to the trade body.