Energy Disruptions and El Niño: Factors Leading to Global Food Crisis

Recent analyses from SP Global have uncovered concerning trends that may foreshadow a global food crisis exacerbated by energy disruptions and climate phenomena such as El Niño. This report highlights the cascading effects of increased fertilizer and energy costs on agriculture, pointing out that the ongoing tensions in the Strait of Hormuz are pivotal in shaping these outcomes.

Fertilizer and Energy Dependencies

According to the report from the SP Global Institute, the intricate relationship between energy supplies and agricultural productivity is under significant strain. With roughly 20% of the global oil and LNG supply flowing through the Strait of Hormuz, disruptions here create a ripple effect that impacts not only energy costs but also the fertilizer production process. Fertilizer, especially urea, relies heavily on natural gas—its production feedstock and energy source.

Before the onset of recent conflicts, around 29% of global urea trade passed through this strait, alongside significant shares of sulfur and ammonia. The authors assert that the war in the region is simultaneously testing these essential supply chains while adverse weather events linked to El Niño loom on the horizon.

Southeast Asia's Vulnerabilities

Countries like India and Bangladesh are especially susceptible to these disruptions. For example, India relies heavily on imports of urea from Gulf producers while domestic urea production depends on LNG—approximately 85% of the urea in India is produced using LNG. The ongoing shortages have already resulted in the cessation of operations at numerous fertilizer plants in Bangladesh, marking a troubling trend that could severely impact agricultural output.

Rising Diesel Costs: A Hidden Squeeze

The challenges do not stop with fertilizer; the escalating costs of diesel—a critical input for farming—are also under scrutiny. With Middle Eastern and Russian sources accounting for around 50% of global diesel exports, any reductions in these supplies can severely impact farmlands across various regions. Recent drops in diesel exports from these key suppliers and rising consumption for seasonal harvests have created a perfect storm for farmers.

In the first week of September 2026, the price difference between crude oil and diesel hit unprecedented levels: over $100 per barrel, compared to historical ranges of $12 to $20. This surge has left farmers with tough choices—either cut back on fertilizer usage or reduce the area they cultivate, both leading to lower food production overall.

Biofuels: A Compounding Factor

Interestingly, the rising cost of oil has made biofuels more competitive, altering the crop selection for farmers. As biofuels become cost-effective alternatives to petroleum-based fuels, more farmers are incentivized to focus on producing crops for biofuel instead of food, further complicating the food supply scenario. As recorded in September 2026, biofuels in Europe were found to be cheaper than oil-based shipping fuels for the first time, highlighting the shifting economic landscape that prioritizes fuel over food production.

The Compounding Effects of El Niño

Perhaps most alarmingly, the anticipated El Niño weather patterns complicate these economic stresses, as it is expected to exacerbate drought conditions and disrupt rainfall necessary for crop resilience. Historical data from NOAA suggests that we could see sea-surface temperatures rise significantly, which is forecast to deepen challenges for farmers as they navigate these input-cost shocks.

Future Implications

The potential decline in crop yields cannot be understated. Estimates suggest possible reductions in output across key agricultural products in major producing nations, with Brazil's corn production forecasted to dip significantly and India's rabi wheat crops at risk due to subpar monsoon rains this year.

The interplay of these factors suggests that while a global food crisis is not predestined, the impetus toward such an outcome is building. As geopolitical unrest disrupts essential supply chains and environmental conditions deteriorate, stakeholders must act to mitigate these threats. Farmers, policymakers, and consumers alike must remain vigilant; the cascading consequences of higher energy costs, climate challenges, and agricultural dependencies are coming into sharper focus, and the time to respond is now.