On 28 February 2026, the United States and Israel launched coordinated military operations against Iran, marking the start of open warfare in the current phase of the conflict. The escalation was rapid. Iran closed the Strait of Hormuz, through which approximately 20% of global oil supply passes, and warned there would be no safe passage for vessels attempting transit. Adjacent Gulf waters have been designated high risk. All five major shipping lines have suspended reefer container bookings to the UAE, Oman, Iraq, Kuwait, Qatar, Bahrain, and Saudi Arabia. Vessels already at sea are being rerouted around the Cape of Good Hope.
The immediate market consequences are significant and spreading. Brent crude rose from $72.87/barrel on 27 February to over $105.89 USD/Bbl by 9 March, an increase of nearly $20/barrel in under two weeks. QatarEnergy halted LNG production following attacks. Saudi Aramco’s Ras Tanura refinery was reportedly affected. Fertiliser production and shipments out of Qatar and Iran have been interrupted, creating a supply shortfall on the world market, primarily for urea and phosphate.
Freight rates are rising across all vessel types, driven by higher bunker costs, elevated insurance premiums, and the need for rerouting. The Suez Canal is effectively off-limits for many carriers; the Cape of Good Hope detour adds both time and cost to Asia–Europe trade routes. The six Gulf countries, Iran, Iraq, the UAE, Kuwait, Saudi Arabia, and Oman, collectively imported 5.7 million tonnes of oilseeds, 5.1 million tonnes of oils and fats, and 5.2 million tonnes of oilmeals in 2025.
Any sustained disruption to these trade flows has material implications for global commodity balances and sourcing strategies. The conflict is, as of the date of this report, only days old. Duration and escalation remain the central unknowns. Most market participants are in a wait-and-see mode. The sections below outline what is already happening, commodity by commodity, based on market data and analysis from the week of 3–6 March 2026.
Read what happened to:
➢ Energy
➢ Vegetable Oils
➢ Grains
➢ Corn
➢ Dairy
➢ Poultry
➢ Sugar
➢ Coffee
➢ Aluminium
➢ Tree nuts
➢ Fresh produce
Energy
The transmission mechanism Every commodity discussed in this report is connected to the conflict through one or more of the following channels. Crude oil prices. Brent crude rose from $72.87/barrel on 27 February to $105.89 USD/Bbl by 9 March, a move of nearly $20/barrel in under two weeks. Iran’s closure of the Strait of Hormuz, which handles around 20% of global oil supply, is the direct driver. Reports of damage to production sites in the Middle East, the halt of QatarEnergy LNG output, and the reported impact on Saudi Aramco’s Ras Tanura refinery have added further supply uncertainty. Freight rates.
Higher bunker fuel costs, sharply increased war risk insurance premiums, and the need to reroute vessels away from the Suez Canal and around the Cape of Good Hope are pushing freight rates higher across all vessel types. Transit times on Asia–Europe routes are extending materially. Fertiliser prices. With the Strait of Hormuz effectively closed and production units in Qatar and Iran temporarily shut, shipments of urea and phosphate out of the Persian Gulf have stopped.
This is creating a supply shortfall on the world market and pushing fertiliser prices higher. For agricultural commodities, this raises production costs and, over time, could influence planting decisions. Biofuel demand. Rising crude oil prices improve the economics of biofuel blending, increasing demand for vegetable oils used as feedstocks. This is a direct price support mechanism for palm oil, soy oil, and rapeseed oil.
Vegetable oils
The vegetable oil complex has moved higher since the outbreak, with the scale of gains varying by commodity. Palm oil (BMD crude) jumped from $1,026/mt on 27 February to $1,123/mt by 9 March, a gain of almost $100/mt. The increase in Brent crude prices is directly supportive through the biofuel demand channel: as oil prices rise, the price spread between palm oil and gas oil (the POGO spread) narrows, making biofuel blending more attractive in markets such as Indonesia.
An estimated decline in Malaysian February stocks is providing additional support. One Malaysian palm oil exporter noted delays on the horizon due to vessels taking longer routes.
Soy oil (CBOT crude) rose from $1,351/mt on 27 February to $1,460/mt by 8 March, a gain of $109/mt. Support came from the spike in Brent crude and expectations around the imminent finalisation of US biofuel blending policies. The US EPA has sent proposed 2026–27 blending quotas to the White House, with finalisation targeted by end of March.
Sunflower oil (West-EU VPI, crude) rose from $1,445/mt on 27 February to $1,490/mt by 9 March, a gain of $45/mt, supported by higher rival vegetable oil prices and stronger energy markets. Some market participants have flagged concern about a potential spillover of logistics disruptions into the Suez Canal.
Coconut oil (West-EU VPI, crude) rose from $2,190/mt on 27 February to $2,250/mt by 9 March, a gain of $60/mt, supported by the bullish sentiment across commodity markets. Philippine buyers were reported attempting to cover April–May positions following the price move. Mid-sized buyers who had been waiting for a market dip were noted as not yet covering despite the increase.
Looking ahead, the key questions are the duration of the conflict and its sustained impact on energy production and logistics. OilWorld notes that with the Strait of Hormuz temporarily closed, shipments of oilseeds and products to the six Gulf countries, which together imported 5.1 million tonnes of oils and fats in 2025, are disrupted. South American soya meal shipments originally destined for this region may need to be rerouted, with a potentially bearish price impact on the world soya meal market as those volumes seek alternative destinations.
Grains
Several factors contributed to grain price increases over the reporting period, but the Middle East conflict is identified in Vesper’s analysis as the most significant. Wheat. Euronext milling wheat rose from EUR 198/mt on 27 February to EUR 208/mt by 6 March. CBOT SRW wheat increased from 591.5 US cents/bushel to 616.75 US cents/bushel over the same period. The conflict is cited as a direct support factor, alongside a weaker euro, with EUR/USD dropping from 1.19 to 1.16, which is making European grain exports more competitive.
Corn
Euronext corn rose from EUR 193/mt on 25 February to EUR 206/mt by 6 March. CBOT corn increased from 448.5 US cents/bushel to 460.5 US cents/bushel. The conflict supported corn via the ethanol channel: higher crude oil prices improve ethanol economics, supporting corn demand. Fertiliser costs. Higher fertiliser prices, driven by the conflict’s disruption to Gulf production and shipment, raise input costs for grain producers. This is noted as a factor that could influence crop margins and, over time, planting decisions. Outlook. For Q1, the conflict is providing direct price support across the grain complex. Whether that support extends into Q2 depends on the conflict’s duration, an open question at the time of writing.
Dairy
The conflict’s impact on dairy markets is operating primarily through supply security behaviour and trade flow disruption rather than direct supply damage. GDT Event 399 (4 March 2026) delivered a broad-based price increase, with the overall GDT index rising +5.7% to an average winning price of US$4,301/t, the fifth consecutive auction increase. Skim milk powder led the complex, with its index up +9.1% to US$3,243/t, exceeding the +7.7% gain implied by pre-event futures. Butter rose +6.1%, anhydrous milkfat +5.7%, whole milk powder +4.5%, mozzarella +7.9%, and cheddar +4.3%.
Of 165 bidders participating, 97 were successful across 18 rounds of trading. Middle Eastern buyers increased their participation share from the previous event, and buyers broadly were willing to pay above derivatives signals to secure prompt coverage. When geopolitical uncertainty spikes in regions that are part of the supply chain, securing supply becomes the primary priority. This is described as driving spot and forward purchasing across multiple dairy markets.
New Zealand milk powders were a specific beneficiary, with Oceanian SMP rising 10% at the GDT event and returning to a clear premium over European product. With the 2025/26 NZ milk season winding down, available volumes are limited, and supply security became a priority for Middle Eastern and Asian buyers.
A premium of approximately $200/mt was the price of that security. Energy costs are also rising for dairy producers, as higher crude oil prices flow through to energy-linked input costs on both sides of the Atlantic. Feed markets represent an additional pressure point: a 10% increase in soybean meal prices can raise dairy feed costs by 4–6%, and given that feed accounts for up to 70% of farm operating expenses, even a sustained modest increase in grain prices compresses producer margins materially.
The Gulf region’s structural import dependency adds a further dimension. The UAE imports roughly 80–90% of its total food consumption, including the feed grains, corn, soybean meal, and alfalfa, that underpin its domestic dairy production. Saudi Arabia imports more than 4–5 million tonnes of feed grains annually. If maritime insurance premiums and freight costs remain elevated, the landed cost of feed inputs for Gulf dairy producers rises accordingly.
During previous periods of regional tension, freight rates in the Gulf increased by 15–30% within weeks, with war-risk insurance premiums rising sharply. Gulf producers have invested in vertical integration and strategic feed reserves to buffer against exactly these scenarios, but a prolonged disruption would test those buffers.
Poultry
The conflict is having a direct and immediate structural impact on global poultry trade flows. All five major shipping lines have suspended reefer container acceptance to Saudi Arabia, the UAE, Oman, Iraq, Kuwait, Qatar, and Bahrain as of 4 March 2026. This has cut off Brazil, the world’s leading broiler exporter, from two of its largest export markets.
In 2025, Saudi Arabia absorbed 259,523 tonnes of Brazilian chicken and the UAE absorbed 248,497 tonnes, making them Brazil’s third and fifth largest export destinations respectively. Brazil enters this disruption from a position of oversupply: slaughter volumes are at a three-month high and prices have fallen for four consecutive months across all major cuts.
With Middle Eastern demand now interrupted, export volumes are expected to be redirected toward Japan, South Africa, and the Philippines, Brazil’s top two and fourth-largest markets in 2025. This redirection may create buying opportunities for European importers as Brazilian product seeks alternative destinations.
Thailand is less exposed than Brazil, as the Middle East represents a smaller share of Thai export volumes. However, the UAE is Thailand’s fifth-largest export market, and some rerouting toward Japan and Malaysia is expected. Exporting from Thailand to Northwest Europe may become more expensive as more volume is rerouted around the Cape. Feed costs are also moving against poultry producers on both sides of the Atlantic, with corn and wheat prices higher and soybean prices rising. This is adding pressure to producer margins.
Sugar
Sugar’s connection to the conflict runs through the relationship between crude oil prices and ethanol economics in Brazil, and it is worth explaining that mechanism clearly, as it is not immediately obvious. Brazilian sugar mills have a structural flexibility that mills in most other countries do not: they can choose, in real time, how much of their crushed sugarcane to allocate toward sugar production versus ethanol production. That allocation decision is driven by the relative profitability of each output.
When crude oil prices rise, ethanol becomes more competitive against gasoline at the pump. If Petrobras, Brazil’s state-controlled energy company, passes international oil price increases through to domestic fuel prices, the economics of hydrous ethanol improve relative to gasoline, incentivising mills to shift more cane toward ethanol and less toward sugar.
This matters for global sugar supply because Brazil is the world’s largest sugar exporter. Even a modest shift in mill allocation, say from 50% sugar to 45% sugar, translates into millions of tonnes less sugar reaching the global market. Datagro’s president has noted that the conflict could further increase demand for Brazilian ethanol, with potential markets in Europe, India, Japan, and Indonesia.
The crude oil spike following Iran’s closure of the Strait of Hormuz, which pushed Brent to $105.89 USD/Bb, has introduced an upside variable for ethanol demand in Brazil at precisely the moment when the new 2026/27 crushing season is approaching. The early-season mill mix is already expected to favour ethanol on firm spot pricing; the current crude environment reinforces that bias. The conflict is also affecting the refined sugar market more directly. Dubai-based Al Khaleej Sugar, one of the region’s largest refineries with a capacity of around 1.8 million tonnes per annum, faces challenges in receiving raw sugar cargoes through the Strait and in exporting refined white sugar.
The white sugar premium rose to $107/t on 3 March, its highest level since September 2025, reflecting tightening concerns in the refined sugar market. Al Khaleej has confirmed it continues to operate normally and holds raw sugar reserves, with the option to reroute shipments through alternative ports if needed. A prolonged disruption, however, would put those contingency arrangements under pressure. India represents a further dimension to the sugar-ethanol dynamic.
India imports more than 88% of its crude oil requirement, a significant share of which transits the Strait of Hormuz, making it directly exposed to supply disruptions. Higher crude prices improve the economics of ethanol blending domestically, and industry participants have called on the government to accelerate blending policy beyond the current E20 target. If crude remains elevated and policy responds, India’s domestic sugarcane diversion toward ethanol could increase, potentially improving India’s sugar export parity at a time when Brazilian supply is also leaning toward ethanol.
It is important to note that the bearish fundamental backdrop for sugar remains intact. The 2025/26 global surplus is well-established across forecasters, and Datagro estimates a global sugar deficit of 2.68 million tonnes only in 2026/27, driven by lower production in Thailand and the EU. The conflict does not change the underlying supply picture. What it introduces is a margin of uncertainty around how much sugar Brazil’s mills will actually produce in the season ahead, with the degree of impact contingent on Petrobras pricing decisions that have not yet been made.
Coffee
Coffee is included here in the interest of accuracy rather than alarm: the conflict has not driven arabica prices higher. The most active May arabica futures contract fell 2.35 cents over the week of the report, ending at $2.83/lb. The Sucafina analysis notes two competing dynamics. On one hand, the military escalation does affect East Africa–Europe trade routes logistically, and passive money flow into the broader commodity complex, as a spillover from energy markets, can introduce additional price volatility. On the other hand, the prevailing view among market participants is that metals and energy are the natural beneficiaries of conflict-driven buying, while softer commodities such as coffee are less likely to see demand increase as a result of geopolitical escalation.
There are also commodity-specific factors pulling in the opposite direction: differentials for most coffee origins have risen to seasonally elevated levels as roasters hold back purchases while futures are below $3/lb, and certified arabica stocks flowing against the March contract have improved the nearby supply picture considerably since Q4 2025. The net picture for coffee is one of added volatility and uncertainty from the conflict, without a fundamental change to supply or demand. Procurement teams managing coffee exposure should monitor the situation, particularly any sustained disruption to East Africa–Europe shipping, but the conflict is not currently the primary price driver for this commodity.
Aluminium
Aluminium is among the most directly exposed metals to the conflict, given the concentration of export-oriented smelting capacity in the Persian Gulf region. The Persian Gulf accounts for nearly 10% of global aluminium production and an even larger share of internationally traded metal. Key facilities include EGA in the UAE, Alba in Bahrain, Qatalum in Qatar, and Ma’aden Aluminium in Saudi Arabia.
Both Qatalum and Alba have declared force majeure on shipments. With the Strait of Hormuz closed, the ability of these smelters to reach export markets is directly impaired. LME three-month aluminium hit $3,544/t on 9 March, its highest level since March 2022. ING has revised its aluminium price forecasts higher, noting the market was already expected to remain in deficit this year prior to the conflict.
In a severe disruption scenario, ING estimates prices could briefly move above $4,000/t, though demand destruction would likely limit further upside beyond that level. Europe is identified as particularly exposed. The Middle East accounts for approximately 30% of Europe’s aluminium imports, predominantly from EGA in the UAE, a dependency that has grown since the sharp reduction in Russian aluminium flows to Western markets following the 2022 invasion of Ukraine.
The United States is also exposed, with the Middle East supplying over 20% of primary aluminium imports, though tariff-inflated Midwest premiums may limit the immediate price impact domestically.
Tree nuts
Walnuts and almonds The conflict is disrupting trade flows in tree nuts, with California walnuts and almonds among the affected commodities. Walnuts. California walnut shipments to the Middle East have come to a standstill. The region, and Dubai in particular, serves a dual role: as a primary end destination and as a trading hub from which product is redirected into markets otherwise inaccessible to direct US exports, including Iran.
With the Strait of Hormuz closed, all of these flows are interrupted. The affected markets include the UAE, Iraq, Jordan, Israel, Lebanon, Qatar, Saudi Arabia, and Kuwait. Approximately 20% of the California walnut crop remains uncommitted. With Middle Eastern demand removed from the market, the industry faces the prospect of significant carryover into the 2025/26 new crop, with associated downward pressure on farmgate prices.
Chile’s walnut season is also approaching, and that origin faces the same logistical obstacles. On the import side, the complete halt of deliveries into the Middle East could tighten local supply and put upward pressure on prices for remaining regional stocks, though market participants caution that the degree of impact depends heavily on the duration of the disruption.
Almond shipments to the UAE are facing execution challenges as the disruption deepens. Carriers have begun withdrawing from previously accepted bookings, issuing cancellations, and adjusting cargo commitments with limited notice. Some services remain operational but are running with irregular routing and sudden schedule changes; others have withdrawn from certain corridors entirely.
Additional charges, including ad hoc surcharges, general rate increases, and war risk premiums, are raising shipping costs materially. Buyers and traders in the region have largely paused activity, waiting for more stable freight conditions. Offers are being made with conditions linked to vessel availability and may be revised until cargo is loaded.
Current price indications in the UAE are not being treated as reliable reference points given the lack of executed transactions. Market participants expect limited activity to continue until shipping conditions stabilise or carriers establish more predictable service patterns.
Fresh produce
New Zealand exports: New Zealand fresh produce exporters are reviewing logistics for shipments originally destined for Persian Gulf markets after shipping lines halted sailings into the region. Kotahi, a New Zealand logistics provider, has reported that approximately 4,000 TEU of cargo is currently in transit on the affected trade lane. Containers bound for the Gulf are being unloaded in Singapore while exporters consult with customers and shipping lines and assess alternative options. The Gulf States account for around 10% of apple exporter Mr Apple’s total sales.
The company also holds the licence for Zespri’s kiwifruit sales to the region, with volumes scheduled to increase in the coming weeks. One option considered, unloading containers in Oman and transporting overland, was ruled out after Iranian drones targeted Omani ports. Exporters are now considering redirecting containers to customers in Asia or returning them to New Zealand. Both options carry cost implications: redirecting to alternative markets means selling into destinations that may not want the specific fruit or sizes committed for Gulf buyers.
Conclusion
The Middle East conflict is, as of early March 2026, a rapidly evolving situation with an uncertain duration and escalation path. Its market effects are already measurable across energy, freight, vegetable oils, grains, dairy, poultry, sugar, aluminium, tree nuts, and fresh produce, each through distinct but interrelated channels.
The common thread is cost and availability. Energy costs are materially higher, with Brent crude up nearly $20/barrel in under two weeks. Freight costs are rising. Fertiliser costs are moving higher. Supply security has become a priority for buyers across multiple categories, and in some markets, notably dairy and poultry, trade flows are already being redirected.
For procurement teams managing exposure across these categories, the central variable remains the duration of the conflict. A resolution within weeks would limit the structural damage. A prolonged disruption would compound cost pressures across the supply chain and force more permanent trade flow adjustments. Vesper is monitoring developments across all commodity categories in real time.
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Further reading
The following articles from leading financial and news outlets provide additional context on current market developments.
Crude oil and commodity markets Reuters — “Oil soars 25%, gold drops as Iran war jolts global commodity markets” (9 March 2026).
Brent crude hit an intraday high of $119.50/barrel on 9 March, putting it on track for its largest single-day gain on record in both percentage and absolute terms. Reuters reports that agricultural markets followed crude higher, with Malaysian palm oil up 9% and Chicago soybean oil climbing to its highest level since late 2022. Wheat rose to its highest since June 2024 and corn hit a 10-month high. Gold fell more than 2% as a stronger dollar and rising inflation concerns, driven by higher energy costs, weighed on bullion and reduced expectations of near-term interest rate cuts. Iraq, Kuwait, and the UAE began reducing oil production as upstream operators faced storage constraints.
Read the full article on Reuters.
Food security and trade flows Financial Times — “Gulf food supplies threatened as ships avoid Strait of Hormuz” (9 March 2026).
The FT examines the food security implications of the Strait of Hormuz closure for the Gulf region. Of the roughly 30 million tonnes of grain imported into the Gulf last year, approximately 14 million tonnes went to Iran alone, with most of that transiting Hormuz. Saudi Arabia imports around 40% of its grains and oilseeds through its eastern Gulf ports; the UAE brings in roughly 90% of those commodities through Jebel Ali in Dubai, which also serves as a containerised food and perishables hub for an estimated 45–50 million people across the UAE, Saudi Arabia, Bahrain, and Qatar. Countries such as Yemen, Sudan, and Somalia, which rely on the UAE as a trans-shipment point, could also face shortages. Iran has already banned all food and agricultural exports until further notice, and its agriculture minister has urged citizens to avoid panic buying, noting that strategic wheat reserves of 4 million tonnes were in place ahead of the conflict. The FAO has warned that sugar and tea could also run short if the conflict persists.
Read the full article on the Financial Times.
Conflict developments and oil market outlook CNN — “Oil prices soar past $100 a barrel as war escalates in Iran” (8 March 2026).
Oil crossed $100/barrel for the first time since Russia’s 2022 invasion of Ukraine, with US crude briefly hitting $110 and Brent futures rising 16% to near $108/barrel. Kpler’s lead crude analyst estimated prices could reach $150/barrel by end of March if Strait of Hormuz transit does not resume. The Trump administration announced a plan to provide insurance coverage for tankers attempting passage and said it would explore naval escorts, though shipping companies indicated they remain unwilling to traverse the region while the conflict continues. A senior Iranian official warned the conflict had entered a “new phase” following Israeli strikes on Iranian oil storage sites and signalled potential retaliation against regional energy infrastructure. Iran has stated it will not relinquish control of the Strait of Hormuz until it achieves its desired outcomes. On the demand side, surging oil and gasoline prices, with the average US pump price up 16% week-on-week to $3.45/gallon, have weighed on equity markets, with Dow futures falling more than 800 points on inflation and economic growth concerns.