①Goldman Sachs reports that the Middle East conflict has driven up oil and fertilizer prices, potentially exposing Southeast Asia to food supply shocks.
②A strong El Niño event is expected to emerge by late 2026, further intensifying food supply disruptions and raising food inflation across the region.
June 22 – Despite the first day of negotiations between the United States and Iran in Switzerland, and their mutual agreement to reopen the Strait of Hormuz, the cascading effects of the Iran war on global supply chains have yet to dissipate.
According to the latest Goldman Sachs report, Southeast Asia is likely to face food supply shocks this year, driven by higher oil and fertilizer prices resulting from the Middle East conflict, as well as the potential impact of a strong El Niño expected in late 2026.
Southeast Asian Nations May Face Food Supply Shocks
Since the outbreak of the Iran war in late February, international energy prices have surged significantly this year. Since the beginning of the year, Brent crude oil prices climbed from around $60 per barrel to nearly $120 per barrel. Currently, despite ongoing peace talks between the United States and Iran, Brent prices remain near $80 per barrel.
Meanwhile, fertilizer and food prices have also risen accordingly. Goldman Sachs estimates that this upward trend will be difficult to reverse in the short term, potentially leading to food supply shocks for Southeast Asian nations.
The report states: “The oil price shock triggered by the Middle East conflict is already reflected in the consumer price index (CPI) components of Southeast Asian countries, while rising fertilizer prices will further increase agricultural production input costs, compelling governments in the region to reassess the trade-off between food and fuel.”
Goldman Sachs also noted that a strong El Niño event, potentially occurring in late 2026, could further aggravate food supply disruptions.
Within six months, the combined effects of oil and fertilizer price volatility and the El Niño impact are expected to raise food inflation in Southeast Asia by an average of 1 percentage point; after twelve months, the increase is projected at 2.1 percentage points.
“These estimates should be viewed as additional pressure on typical food inflation trends, rather than as a forecast for overall food inflation,” the report added.
Singapore and the Philippines to Face the Most Direct Impact
Among Southeast Asian nations, Goldman Sachs expects Singapore and the Philippines, as net food importers, to bear the most direct impact from global food price fluctuations.
Meanwhile, other parts of Southeast Asia also face risks of food price shocks.
For instance, although Malaysia and Indonesia appear more resilient in agriculture due to their domestic palm oil industries, without accounting for their palm oil sectors, both countries would also become net food importers.
Furthermore, over 90% of Thailand’s fertilizer relies on imports, which exposes the country to the risk of a global food crisis due to rising input costs for food production.
According to a research report from the London School of Economics and Political Science, as the war in Iran leads to fuel shortages, this impact is likely to be reflected in food prices. Since energy is a key production input and transportation cost for commodities such as food, oil price fluctuations can rapidly propagate along the supply chain.
A previous report by the Organisation for Economic Co-operation and Development (OECD) also indicated that sustained disruptions in oil supply could further push up fertilizer prices from the Middle East and potentially affect its supply. The report stated:
“This could affect the sowing and harvesting seasons in 2026 and 2027, reduce yields, and potentially lead to higher food prices in the long term.”
