Insight Focus
April saw the US–Iran war continue to disrupt supply chains. Fighting resumed after a failed ceasefire and stalled talks, leaving energy markets, freight routes, fertiliser supply and macroeconomic conditions under pressure into May. Elsewhere, a FAO and WMO report warned that extreme heat is adding further strain to global food production and supply chains.
The ongoing war between the US and Iran continued to disrupt supply chains and global trade through April, following the end of the two-week ceasefire that began on April 8. While the temporary truce had raised hopes of easing pressure on shipping routes and commodity markets, those expectations have faded as fighting has resumed and the ceasefire has now officially lapsed.
The two countries remain locked in talks, mediated by Pakistan, as they seek a path to end the war and reopen the Strait of Hormuz. However, as of April 28, Trump has rejected Iran’s latest proposal to reopen the waterway. The White House confirmed that the president had met with his national security advisers to review the proposal, though sources cited by Reuters and CNN indicated he was unlikely to accept terms that delayed further negotiations on Iran’s nuclear programme.
As it stands, the war looks set to continue unless an unexpected breakthrough in talks occurs. With the ceasefire now over, disruptions to supply chains, elevated freight costs and broader pressure on agricultural input markets are expected to persist into May.
Oil Hits High on Continued Disruption
Energy markets have reacted sharply to the lack of resolution. On April 29, Brent crude futures for June delivery traded 3% higher at USD 114.64/barrel, a near four-year high, extending gains for an eighth consecutive session. US West Texas Intermediate (WTI) futures for June delivery rose 3.6% to USD 103.54/barrel, building on a 3.7% gain in the previous session and leaving the contract up more than 49% since the conflict began on February 28.
With the Strait of Hormuz disruption now stretching into its ninth week, oil market analysts are beginning to reassess their timelines for a return to normal traffic through the waterway and have raised their oil price forecasts as the disruption drags on.
ING has revised its base case higher, now forecasting ICE Brent to average USD 104/barrel in Q2 2026, up from its previous estimate of USD 96/barrel. It also raised its Q4 Brent forecast to USD 92/barrel, from USD 88/barrel, citing significant inventory drawdowns and a slower-than-expected recovery in trade flows through the Strait of Hormuz.
Likewise, Goldman Sachs has also raised its oil price outlook, forecasting Brent Crude at USD 90/barrel in Q4 and WTI at USD 83/barrel.
First Container Seizure Escalates Freight Disruption
As mentioned, the Strait of Hormuz is now effectively closed to normal commercial traffic, with vessel movements increasingly constrained by military risk, seizures and rerouting. The clearest sign of escalation came on April 22, with the first containership seizure of the war.
Iran’s Revolutionary Guards captured the MSC Francesca (an 11,660-TEU container ship bound for Sri Lanka) after firing on two other vessels in the Strait. With that, what carriers had largely treated as an energy disruption became something far more structural, a shipping corridor closure enforced through vessel seizure.
As for freight rates, the picture remains mixed. Drewry’s World Container Index edged down 1% week-on-week to USD 2,232 per 40-foot container on April 23.
However, the headline figure masks growing divergence across key trade lanes. Asia–Europe rates remained soft, with Shanghai–Rotterdam falling to USD 2,229 and Shanghai–Genoa slipping 2% to USD 3,343 as carriers continued to add capacity. By contrast, Asia–US routes firmed, with Shanghai–Los Angeles up 4% to USD 2,934 and Shanghai–New York holding near USD 3,562, as carriers tightened Transpacific capacity and introduced fresh peak season surcharges ahead of May.
The sharpest move came on the Transatlantic, where North Europe–US East Coast rates jumped 15% week-on-week to USD 2,326/FEU. That rise has been driven in part by cargo rerouting and higher-cost land bridge alternatives, with Jeddah transit rates now at USD 4,969/FEU, up 63% since late February.
Fertiliser Supply Shock Deepens Pressure on Grains
Fertiliser is the other major product being hit by the war, with the Middle East a key global production hub and much of global trade moving through the Strait of Hormuz. Urea exports from Qatar have been disrupted, while ammonia and sulphur flows have also been curtailed.
According to Argus, at least 2 million tonnes of urea production have been lost since the conflict began, already pressuring agricultural markets, particularly grains, which remain exposed to higher fertiliser costs and weak crop prices.
Farmers are now facing a second major fertiliser price shock in just four years, after prices surged in 2022 following Russia’s invasion of Ukraine.
There are, however, some key differences this time. In 2022, despite severe disruption, a significant volume of fertiliser was still moving through global markets. This time, the supply crunch is sharper, with tighter availability and fewer alternative supply routes.
The main difference is on the demand side. In 2022, grain prices were high enough to offset rising input costs. Today, that cushion is far weaker: Chicago wheat prices are roughly half of what they were four years ago, while soybeans were around 50% above current levels. As a result, many growers now lack the margin to absorb higher fertiliser costs.
For now, the immediate impact has been limited by existing inventories and ample grain stocks following last year’s strong harvests. However, concerns are building over future crop production. In Brazil, analysts expect farmers to reduce fertiliser use and switch to cheaper products, raising questions over yields. In Southeast Asia, palm oil production is expected to tighten further, while in Europe some farmers are shifting away from fertiliser-intensive spring crops such as corn.
If the war continues with no clear resolution, risks for autumn planting will rise. Growers facing prolonged margin pressure may reduce fertiliser use further or cut planted grain area, increasing the risk of lower yields and tighter global grain supplies.
Global Growth Slows as Inflation Accelerates
Beyond trade flows, the wider macro backdrop is also weakening. S&P Global’s April Purchasing Managers’ Index (PMI) — a closely watched measure of business activity across manufacturing and services —showed output growth slowing to its weakest three-month pace since early 2024, with overall activity now consistent with annualised growth of little more than 1%.
The report also showed inflation accelerating sharply. Output prices rose at their fastest pace since mid-2022, while goods prices among manufacturers climbed at the fastest rate in 10 months and service sector selling prices rose at their quickest pace in almost four years, as higher fuel and input costs fed through the economy.
S&P said the drag was most visible in services, where weaker spending and rising costs are beginning to weigh more heavily on broader activity. Manufacturing was more resilient, supported in part by precautionary stock building and continued AI-linked investment, but the broader signal from April’s PMI is that the war is now feeding more clearly into global growth and inflation.
Climate Stress Adds Structural Risk to Food Systems
Away from war, longer-term risks to agricultural supply chains are also being driven by climate stress, with extreme heat increasingly emerging as a structural threat to global food production. A joint report by the FAO and the WMO warns that rising temperatures are pushing food systems “to the brink,” with more than a billion livelihoods potentially at risk.
The report highlights how more frequent and severe heatwaves are already weighing on both crop output and labour productivity already weighing on both crop output and labour productivity. In already hot regions, including South Asia, sub-Saharan Africa and parts of Latin America, outdoor agricultural work could become unsafe for up to 250 days a year.
Livestock are also under increasing strain, with heat stress reducing milk yields and quality while raising mortality risks. At the same time, key crops such as wheat and maize are already showing yield declines of around 10% in affected areas.
Beyond land-based production, the report also points to growing disruption in marine systems, with ocean heatwaves reducing oxygen levels and contributing to declines in fish populations. The FAO and WMO warn that without faster adaptation, including stronger early-warning systems and changes in farming practices, climate-driven losses are likely to intensify, adding further volatility to already fragile global food and agricultural supply chains.
