Everyone is watching missiles, oil, and Wall Street. Almost nobody is paying attention to what is about to hit your grocery cart.
Oil closed at $95.73 per barrel today. The Strait of Hormuz, which carries roughly 20% of the world’s oil, is effectively shut. Ships are stranded. Deliveries are delayed. Markets are already reacting violently.
The International Energy Agency is releasing 400,000,000 barrels of oil, the largest emergency release ever. Governments are throwing every barrel they have into the market. Even that massive intervention has not stopped prices from climbing.
The 10 Year Treasury yield is above 4.24%, signaling investors expect inflation to accelerate. Treasury Secretary Bessent says the Fed is far from going back to quantitative easing. Higher yields mean mortgages, loans, and credit card payments are getting more expensive immediately.
Credit markets are breaking. Private credit defaults have reached 9.2%, an all-time high. JPMorgan and Morgan Stanley are freezing lending and blocking fund withdrawals. Billions of dollars are trapped while risk silently grows behind the scenes.
The war is hitting food directly. Saudi Arabia, Qatar, and the UAE produce 30% of the world’s fertilizer, which depends on natural gas shipped through the Gulf. Fertilizer prices have jumped 40% in just 12 days. Less fertilizer means smaller harvests. Smaller harvests mean skyrocketing food prices.
This is not hypothetical. In 2022, when Russia disrupted Ukraine, wheat doubled, corn hit records, cooking oil vanished in Europe, and US egg prices jumped 70%. Now Iran is threatening four Gulf states simultaneously. Oman evacuated all ships from its main port.
Around 20% of global grain shipments pass near the Gulf. Gulf states rely on 85% of food imports by sea. When shipments stop, they compete for global supplies, driving prices higher. China is stockpiling wheat and rice. India has restricted rice exports. A $5 loaf of bread could be $9. A $4 dozen eggs could cost $8. Your weekly grocery bill could surge 40-60% in the next 60 days.
Energy shortages push inflation. Inflation pushes yields higher. Higher yields tighten credit. Credit stress slows growth. Rising fertilizer prices push food costs into the stratosphere. Every piece is connected.
This is not a small disruption. This is a chain reaction hitting oil, credit, and food simultaneously. Most people will not notice until it is too late.
-DR