Iran conflict fuels commodity price surge; food inflation fears rise

The ongoing conflict involving Iran has sent ripples through global markets, dramatically affecting the prices of essential commodities. Slovak analysts are closely monitoring the situation, with particular concern over the escalating costs of aviation fuel and fertilizers, which have direct implications for both the energy and agricultural sectors.

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According to some sources, aviation fuel has become more expensive by more than 100 percent since the beginning of the war, which is reflected in flight cancellations and rising prices of new tickets.

Ondrej Greguš, a financial markets analyst at XTB, highlighted the stark price increases. Aviation fuel, crucial for air travel and logistics, has reportedly surged by over 100% since the conflict's inception. This sharp rise is already leading to flight cancellations and increased air ticket prices. Similarly, urea, a vital nitrogen fertilizer, has seen its price jump by nearly 50% compared to the same period last year. This increase poses a significant challenge for European agriculture, potentially impacting crop yields and food production.

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The price of urea, which is a key nitrogen fertilizer, has jumped by almost 50 percent compared to the same period last year.

Greguš further warned of the potential for more severe consequences if the conflict intensifies. He anticipates a more substantial rise in food prices across the European Union by the end of 2026. This projection is based on the interconnectedness of global supply chains and the sensitivity of food markets to geopolitical instability. The British Food and Drink Federation has already revised its food inflation forecast upward, from three percent to nine percent, should the crisis persist.

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In the event of an escalation of the war, a more significant rise in food prices in the EU is expected towards the end of the year 2026.

Interestingly, while many commodity prices are soaring, gold, traditionally seen as a safe-haven asset during times of uncertainty, has experienced a decline of approximately 10%. This counterintuitive trend adds another layer of complexity to the market's reaction to the conflict. The situation remains fluid, with diplomatic efforts stalled and key trade routes, like the Strait of Hormuz, facing potential disruptions, further fueling market volatility and concern.

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The diplomatic situation remains frozen. The first round of negotiations in Islamabad, Pakistan, ended without an agreement, and the second round has no fixed date.