Bloomberg Podcasts• Apr 10, 2026• 11:07Interview

Nations Race to Secure Enough Fertilizer and Prevent Food Crisis

From Bloomberg Podcasts

Homae Yun Tai•Senior Partner and Leader, McKinsey Global Energy and Materials Practice

Executive Summary

A crisis in the Strait of Hormuz is causing a long-term, structural reconfiguration of global energy supply chains, not just a temporary disruption.
Asian economies like South Korea and Japan are disproportionately impacted, facing fuel shortages and rethinking long-term energy contracts, leading them to re-license coal plants for energy security.
The crisis is creating secondary inflationary pressures in the U.S.
through higher costs for energy-intensive goods like fertilizers, impacting food prices despite relatively stable domestic natural gas.
Significant geopolitical uncertainty is causing broad-based hesitation in new capital investments, even with oil prices at $100 per barrel, affecting sectors from energy drilling to manufacturing.

12 quotes

Concerns Raised

Long-term structural damage to global energy supply chains.
Acute energy security risks and economic disruption in Asia.
Persistent secondary inflation from rising input costs like fertilizers.
Investment paralysis due to market uncertainty, risking future supply shortages.

Opportunities Identified

Accelerated diversification of energy sources for import-dependent nations.
Increased strategic importance of stable, domestic energy production like U.S. natural gas.

Key Themes

Structural Shift in Global Energy Markets

The crisis in the Strait of Hormuz is viewed as a catalyst for a permanent reconfiguration of global energy supply chains, rather than a short-term disruption. Nations, particularly in Asia, are being forced to fundamentally re-evaluate their long-term energy sourcing strategies away from the Middle East.

This shift has lasting implications for energy security, international trade routes, and the strategic alliances of energy-importing nations, potentially accelerating diversification towards new suppliers and technologies.

Asian Energy Security Under Duress

Asian countries like South Korea and Japan are facing acute energy insecurity due to their heavy reliance on Middle Eastern supplies, with reserves dwindling to a critical six-week level. This has forced them to take immediate, and sometimes counter-intuitive, measures like re-licensing coal-fired power plants to ensure grid stability.

This highlights the geopolitical fragility of energy-dependent economies and could accelerate a regional diversification of energy sources, impacting both fossil fuel and renewable energy markets globally.

Second-Order Inflationary Effects

The disruption extends beyond direct fuel prices, creating secondary inflationary waves through the rising cost of energy-intensive inputs like fertilizers and chemicals. These costs are expected to filter through to consumer food prices over several months, contributing to 'sticky' inflation.

This demonstrates how localized geopolitical events can have far-reaching macroeconomic consequences, complicating central bank efforts to control inflation and impacting consumer purchasing power worldwide.

Investment Paralysis Amid Uncertainty

Despite high oil prices, which typically incentivize new production, the profound geopolitical uncertainty is causing widespread hesitation in capital investment. Companies across sectors, from energy to manufacturing, are pausing major projects due to the unpredictable nature of future prices and supply chain stability.

This investment freeze could lead to future supply constraints, potentially prolonging the period of high prices and volatility even after the immediate crisis subsides, creating a challenging environment for long-term corporate planning.

Dissonance Between Physical and Financial Markets

A significant gap exists between financial market oil prices (e.g., futures) and the actual cost of securing physical supply, reflecting deep-seated logistical and supply chain problems. A ceasefire alone will not resolve these underlying physical bottlenecks, meaning price volatility and supply issues will likely persist.

This highlights that market signals can be misleading and that resolving geopolitical tensions doesn't instantly fix the complex, real-world logistics of global trade, a crucial insight for investors and risk managers.

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Topics

Energy Security Geopolitics Strait of Hormuz Global Supply Chains Inflation Oil Prices Natural Gas Brent Crude WTI Fertilizer Costs Energy Transition Renewable Energy Coal Power Asian Economies Investment Strategy

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