The following piece originally appeared as “The US–Israel–Iran Conflict: Energy, Climate & Food-Water Impacts” on ORF Middle East’s Expert Speaks.
By: Arnold Musungu, Leigh Mante, and Reem Sagahyroon
Nearly 20 million barrels of globally traded petroleum transit the Strait of Hormuz daily, of which 14.8 million barrels of oil per day lack access to an alternative route. The situation is even more acute in gas markets, which have less flexibility and limited storage options.
Energy underpins virtually every sector of the global economy whether as a feedstock or through transportation. The conflict has driven oil and gas prices sharply upward, sending shockwaves across global markets. Estimates suggest that the global GDP loss could range from US$770 billion — if the conflict endures for 4-6 weeks, with Brent crude prices between US$100-120 — up to US$2.2 trillion if the conflict persists for 3-6 months, with prices rising above US$130.
Yet, the consequences extend far beyond energy and the economy indicators. The ensuing crisis is also intensifying food and water insecurity, climate systems, and agricultural production.
The Climate and Energy program from ORF Middle East provided concise analysis of these impacts and reflections on potential pathways forward.
Rethinking Global Fertilizer Security: Lessons from Hormuz Crisis
With the war in its third week, this fertilizer crisis offers important lessons for both the Gulf region and the rest of the world. For the Gulf Cooperation Council (GCC) countries, this implies that petrochemical diversification alone does not create economic resilience as long as production and exports share the same geographical vulnerability. Saudi Arabia, for instance, has an east-west pipeline for oil. Yet, no comparable alternative exists for fertilizers. Building alternative export corridors and relocating part of production capacity to politically more stable locations are long-overdue investments.
Countries in Social Security Agreements (SSA) and South Asia — which import a large portion of their nitrogen fertilizers, for instance, India (41%), Sudan (54%), Tanzania (31%), Kenya (26%), Thailand (71%), and South Africa (67%) — should ultimately build strategic reserves, similar to what most governments are already doing for crude oil. Furthermore, accelerated investment is needed in local and regional fertilizer production, supported by renewable energy. Green ammonia, though still costly, offers precisely this independence from fossil fuel supply chains and geopolitical bottlenecks.
At the multilateral level, a coordinated mechanism for fertilizer supply security is long overdue, comparable to the IEA emergency reserve coordination for crude oil. A global crisis reserve for agricultural inputs, combined with transparent early-warning systems for supply shocks, would mitigate the worst effects of future disruptions.
The Strait of Hormuz crisis have demonstrated that fertilizer security and energy security cannot be considered in isolation. Focusing solely on oil prices while ignoring the fertilzser supply chains undermines the true extent of geopolitical vulnerability.
Arnold Musungu is Associate Fellow for the Climate and Energy program at the Observer Research Foundation, Middle East.
Testing Limits of Food Resilience: Gulf to Globe
Increasing hostilities around the Strait of Hormuz — a maritime chokepoint at the helm of global fuel and fertilizer trade — have subsumed regional and global food systems under pressure. Similar to COVID-19 and the Russia-Ukraine war, the current conflict challenges logistical capacity, supply chain fluidity, and global food reserves. While the Gulf can safeguard its food security through storage, logistics, and diversified trade corridors, the rest of the world must brace for elevated food prices and potential shortages.
While the import-dependent Gulf has found momentary relief through backup gateways in Jeddah, Oman, and the UAE’s east coast, these lack capacity to absorb full trade diversion. Sustaining trade momentum, low prices, and stocked shelves is the next challenge. With summer approaching and food transiting through longer and costlier routes like the Cape of Good Hope, the Gulf’s recent investments in cold chain logistics will become crucial to preventing spoilage. Pairing the region’s logistics strategies with its established food corridors — such as DP World’s investments in India and Africa — will help sustain food supply, especially if the conflict extends beyond the region’s six month grain reserve.
Although immediate impacts have been localized, a narrow window remains to prevent massive global shocks to food availability and pricing. Maintaining open trade, avoiding protectionist measures, and ensuring physical and economic food access is paramount. The FAO’s Food Import Financing Facility provides emergency financing for food-import dependent countries during global crises. In vulnerable countries, targeted cash transfers can mediate temporary shocks by improving food consumption and access. Humanitarian donors are also pursuing alternate transit corridors to ensure food reaches conflict zones.
A persisting conflict will once again test the bounds of food systems resilience. In an era of compounding crises, integrated systems of diversified trade, logistics, and financial resilience mechanisms will help ensure that countries reap the benifit of sustained food security.
Leigh Mante is Junior Fellow for the Climate and Energy program at the Observer Research Foundation, Middle East.
Maximizing Water Security: National Capacity, Regional Cooperation
The targeting of critical desalination infrastructure in Bahrain amid the ongoing U.S.-Israel-Iran conflict underscores the growing reality of water weaponization in times of war. This is of vital concern across Gulf countries, the majority of which are water-scarce and rely on domestic desalination to meet water needs. Dependency ranges from 42-90%, with the region collectively producing approximately 40% of global desalinated water. Disruptions therefore pose immediate risks to water availability, as alternatives remain limited.
Against this backdrop, continued reliance on centralized, country-level water strategies exposes structural vulnerabilities, reinforcing the need to move beyond a purely domestic approach. Enhancing and safeguarding water security will depend on striking a balance between national sovereignty and regional interdependence, notably during extreme disruptions.
At the national level, resilience requires a continued shift towards efficiency and diversification. Strategies should move beyond supply expansion and embed risk distribution within system design. Expanding water reserves while decentralizing and distributing desalination can reduce exposure to single point failures. Advancing wastewater reuse — through improved technologies, expanded networks, and public awareness — offers a less resource-intensive supply option. Integrating adaptation measures, such as sustainable demand-side management, across all strategies is essential to preventing water overuse and groundwater overexploitation, both of which undermine water security efforts.
Beyond national measures, water security can be advanced through regional cooperation and regional contingency measures. Revisiting the GCC Unified Water Strategy (2016-2035) presents an opportunity to bolster integrated resource planning and revive transboundary water management efforts that have historically stalled. Advancing toward a binding framework could support tangible progress. In the near term, the upcoming 2026 UAE-Senegal-led UN Water Conference offers a timely platform to reintroduce discussions on shared emergency water reserves and the expansion of cross-border water transfer systems.
As water systems become increasingly digitalized and vulnerable to cyber warfare, risk management remains critical at both national and regional levels. Reinforcing the cybersecurity of water assets, particularly in already water stressed environments, is essential to maintaining operational reliability.
Reem Sagahyroon is a Research Assistant for the Climate and Energy program at the Observer Research Foundation, Middle East.