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As we enter Day 38 of the conflict, the Strait of Hormuz blockade has stopped being a crisis and started being a condition. There is no visible resolution. The U.S. has made clear it does not intend to be the one to fix it. President Trump's April 1 national address essentially told allies to "build up some delayed courage" and "just take" the Strait for themselves, while simultaneously suggesting affected nations could simply "buy oil from the United States. The cavalry is not coming.
Brent crude at $108 per barrel and LNG force majeures are already squeezing margins through higher fuel costs, shipping surcharges, and utility bills across virtually every industry. That pain is real and well-documented. But the less-discussed (and potentially more lasting) downstream consequence of this disruption will soon arrive on every kitchen table in America: the price of food.
Approximately 30% of global ammonia-based nitrogen fertilizer moves through the Gulf. Natural gas — now severely disrupted — is the essential feedstock for ammonia, which gets processed into urea, the building block of nitrogen fertilizer. Since the conflict began, urea prices have jumped 50%, from $482 to $720 per ton. The Gulf region also produces 50% of the world's sulfur supply, a necessary input for phosphate fertilizers.
U.S. agriculture relies heavily on both. Nitrogen is critical for corn and wheat; phosphate is used broadly across corn, soybeans, and wheat. Corn is the most exposed crop overall since it requires heavy doses of both, and it also the most critical in meat production, being a dietary cornerstone for beef and dairy cattle, hogs, and chickens. The downstream effect of the disruption is already showing up in planting decisions, with some farmers are reporting 40% shifts in acreage away from nitrogen-heavy corn toward soybeans to cut costs. Between the costs of fertilizer, feed, shipping, and packaging, experts project that global food costs could rise 12–18% by the end of 2026.
To understand how a regional conflict transmits into a middle-market P&L, trace the supply chain of a standard cheeseburger.
The beef patty. Higher urea and ammonia costs make corn and soy significantly more expensive to grow and cattle more expensive to feed.
The bun. Nitrogen-intensive wheat farming is squeezed by fertilizer scarcity.
The cheese. Dairy production is hit by the same feed-input shock affecting beef.
The produce. Fresh vegetables depend on energy-intensive irrigation and diesel-driven refrigerated transport, with shipping now subject to a 15–30% surcharges.
The packaging. Roughly 84% of Middle Eastern polyethylene exports move through the Strait. With the waterway blocked, polyethylene prices have seen their largest monthly increase in 25 years. Every wrapper, bag, and box now carries an embedded petrochemical premium.
Food is just the most visible transmission point. The same chain runs through plastics, chemicals, building materials, and industrials. If your business touches energy, packaging, or transportation, you are in this story whether you ordered the cheeseburger or not.
Model EBITDA at $130 oil. You must be able to run this scenario within 48 hours. Buyers and lenders are already stress-testing at sustained high-energy prices, and you need the answer before they ask.
Normalize your 36-month P&L. Properly classifying war-related cash flows supports a credible Quality of Earnings analysis. Buyers treat ambiguity as a reason to discount; clarity on what is a "war-related" shock versus core performance protects your valuation.
Document your pricing power. Don't just report inflation. Document customer acceptance rates for your price hikes and any contractual pass-through language. This is the only direct offset to a rising input-cost narrative.
Stress-test covenants and liquidity. Headroom can shrink rapidly from demurrage costs and slower receivables from stressed customers. Verify your debt maintenance limits today.
Reduce owner dependency. Documented processes and a strong management team are the ultimate safe-haven assets. The less a business relies on a single person to navigate the chaos, the more valuable it remains to an acquirer.
The economic ripples of this conflict will likely be felt throughout 2026 and into 2027. The businesses that thrive are those that treat this as the new baseline and prepare their financials for a marathon, not a sprint.
Black Diamond Capital Advisory works with middle-market owners who are serious about protecting their valuation. If this piece raised questions about your business, we'd like the chance to answer them. Reach out today.