The Strait of Hormuz “Blockade”: US Pizza Prices Rise?

The US and Israeli attacks on Iran have caused a blockade of the Strait of Hormuz, with impacts far exceeding the disruption of oil and gas supplies. These impacts threaten numerous related industries globally, including logistics, chemicals, manufacturing, and agriculture. How did these effects occur?

In the US, pizza is a staple food. Many analysts say the Middle East situation is driving up US prices. As a consumer good at the end of the supply chain, where are pizza prices rising? How can we understand the current global economic impact through this consumer product?

What else has increased in price?

The Strait of Hormuz blockade prevents goods from being transported, directly affecting the normal operation of many industries. Take the pizza purchased by American consumers as an example: the logistics and material costs across the entire supply chain will rise sharply.

“Without trucks, America stands still!” Following the US-Israel attacks on Iran, Scott Jeffrey, owner of a trucking company in Utah, is most worried about the continuously rising diesel prices and the ever-increasing transportation costs, the largest component of his business.

Rick Crasby, executive director of the Utah Trucking Association, said that 80% of the state’s daily supplies rely on truck transportation, including grains, oils, meat, and dairy products. Essential ingredients for making pizza are among them.

Not only are the transportation costs for pizza ingredients increasing, but the transportation costs for pulp used to make paper bags and napkins are also rising. These additional costs will ultimately be reflected in the price of individual pizzas.

According to traditional price transmission patterns, rising oil prices will spread to liquefied natural gas and coal, and then to basic chemicals such as ethylene and propylene. These basic chemicals have another familiar name: plastics. In a typical American pizzeria, plastic food containers, plastic bags, and plastic cutlery all face the impact from the distant Middle East.

Currently, the prices of various futures contracts related to plastics have skyrocketed. Global chemical giant BASF announced a global price increase for core plastic additives, with increases reaching up to 20%.

US media analysis predicts that the free disposable gloves offered in pizzerias may become a significant burden for owners in the future.

What else will rise in price?

What’s alarming isn’t just the current price increases, but the fact that many things will see further price hikes due to the ongoing Middle East conflict.

Spring has arrived in the Northern Hemisphere, and farmers from the US and Europe to India are beginning spring planting. The tensions in the Middle East have caused a blockage in the Strait of Hormuz, which carries about one-third of the world’s seaborne fertilizer trade, leading to severe secondary impacts on the global agricultural supply chain. This will, of course, affect the price of pizza in the US.

Natural gas from the Middle East is a crucial raw material for nitrogen fertilizer. Gulf countries not only synthesize nitrogen fertilizer but also export liquefied natural gas. The current situation means that major agricultural countries like Brazil and Sudan are finding it difficult to purchase nitrogen fertilizer from the Middle East, while nitrogen fertilizer producing countries like India and Pakistan are struggling to obtain raw materials. In the past month, the benchmark price of urea has risen by about 30%.

The same applies to phosphate fertilizer. Producing this fertilizer requires sulfur to convert phosphate rock, and sulfur is a byproduct of the petrochemical industry. Therefore, Gulf countries produce about one-fifth of the world’s phosphate fertilizer and about one-quarter of its sulfur.

American farmers typically purchase fertilizer in March and use it extensively in April and May. Currently, these farmers are already feeling the pressure.

The American Farm Bureau Federation (AMF), representing 6 million farming families and a key political ally of the current U.S. federal government, sent a warning letter to the President: this is a “national security issue,” and farmers across the country, preparing for spring planting, are facing the most severe situation in history.

Analysts predict that disruptions to the fertilizer supply chain could raise the price of “household food” in the U.S. by 2%, which will be reflected on pizza price tags.

Is the impact limited to pizza?

Pizza is just a microcosm. It vividly illustrates the ripple effects and impacts of a “blockage” in the Strait of Hormuz on the global economy. In fact, the related impacts are numerous.

For example, disruptions to the global supply chain of plastic products will not only affect pizza packaging but also the production of a large number of industrial manufactured goods, directly impacting industries from automobile manufacturing to electronics production. This is also why the capital markets of countries like Japan and South Korea, which heavily rely on Middle Eastern oil supplies, have experienced several sharp declines following the escalation of tensions.

For example, most emerging market countries are net energy importers. Soaring oil prices can impact their balance of payments, leading to currency devaluation, capital outflows, and even debt crises. Following the US-Israeli attacks on Iran, the emerging market currency index, which tracks multiple currencies, experienced its largest single-day drop since November 2024 after the escalation of the conflict, and its trend has remained weak ever since.

The United Nations warns that rising food and energy prices will hit poorer countries and low-income families the hardest, potentially exacerbating the global food security crisis and social instability.

If tensions in the Middle East continue, the “blockage” in the Strait of Hormuz will inevitably transform into a “blockage” in the global economy. Rising pizza prices in the US will be a microcosm of the risk of stagflation in the global economy. Behind the pizza prices and inflation rate tables lies the “Achilles’ heel” of the global supply chain and the “domino effect” of unilateralism toppling the global economy.