IEA warns diesel, fertiliser shock to push up food prices

International Energy Agency chief Fatih Birol warned on October 26 that surging diesel prices and disrupted fertiliser supplies could hurt agricultural production and push up food prices in the coming months. He said diesel prices have doubled since the Middle East war began, and the warning comes as many countries enter their planting season.theedgemalaysia.com

"What worries me is that diesel is very important for the global economy, and it is also very important for the agriculture sector, as many countries are entering the planting season," Birol said at Singapore International Energy Week. Fuel and fertiliser are among the largest costs farmers face, so the energy shock that began with the Iran war in late February is now starting to affect food supply.thestar.com.my+1

Crude is only part of the problem

Birol said the crisis should not be judged by crude prices alone, pointing to "significant challenges in refined products, starting with diesel, liquefied petroleum gas (LPG), gasoil and jet fuel". "Oil prices are flirting with US$120 a barrel and the prices for products are even much higher," he told reporters. He added that he sees no "credible pathway" for markets to return to pre-war conditions in 2027. Brent crude futures hit $117 on October 23, their highest in almost six months, after Houthi attacks on Saudi Arabia.egyptoil-gas.com+2

Winter is adding to the strain. Refinery maintenance is coinciding with seasonal demand for heating diesel. The IEA's October Oil Market Report expects gasoil supply to fall short of demand in the fourth quarter, with stocks unlikely to recover before the second half of 2027.egyptoil-gas.com

Farm costs climb

Birol made a similar point at a recent Chatham House event. He said about 60% of the production cost of wheat, rice and maize comes from fertiliser and diesel. Many farmers "will have difficulties" this season, he said, and higher food prices could combine with oil prices to drive inflation that is "just the beginning".chathamhouse.org

Fertiliser costs remain high. The AMIS Market Monitor said the fertiliser cost index for French wheat was 135% above its 2019 baseline in September. The comparable index for US maize was almost twice its 2019 level. In South Africa, inland wholesale diesel rose from R19.34 a litre in October 2025 to R31.95 in October 2026, and further increases are possible in November.farmersweekly.co.za+1

Weather adds risk

The energy shock comes as an El Niño cycle threatens crop output. In Malaysia, nearly a tenth of diesel supply and about a quarter of urea fertiliser come from the Persian Gulf. The Food and Agriculture Organization's chief economist, Máximo Torero Cullen, warned in April that "any country which uses fertiliser will have to pay higher prices." He said lower fertiliser use could cut yields, with the effects becoming clearer in the second half of 2026 and beyond.theedgemalaysia.com