The International Energy Agency's 32 member countries agreed to release 400 million barrels of oil, the largest release of emergency stockpiles in the IEA's history. Yet experts caution that this unprecedented intervention may provide only temporary relief unless the underlying crisis resolves.
The International Energy Agency said Wednesday that member countries had unanimously agreed to release 400 million barrels of oil to ease prices soaring due to the Iran war, but oil prices still didn't go down. The reason is both simple and sobering: the Strait of Hormuz has experienced ongoing disruption since 28 February 2026, following joint military strikes by the United States and Israel on Iran, which included the killing of Iran's supreme leader Ali Khamenei, prompting Iranian retaliatory attacks on US military bases and Gulf states.
The scale of the challenge becomes clear when examining shipping flows. More than 20 million barrels of oil typically transit the strait every day, helping meet the world's daily demand for more than 100 million barrels of crude oil. Alternate routes represent only about 17 per cent of typical flow volumes, and no combination of available alternatives is capable of materially offsetting a sustained disruption to strait transit. The emergency oil release, by contrast, can add supply at a rate of roughly 1.4 million barrels per day; insufficient to bridge the shortfall.
For Australian agriculture, the crisis extends well beyond oil. Since the beginning of the conflict, the price of urea, a key source of nitrogen used in agriculture, has surged by about 25 per cent, similarly dramatic to the spike in crude oil prices. The timing could scarcely be worse. After fertiliser giant Incitec Pivot shut down its Gibson Island manufacturing facility near Brisbane in 2022, the country was left with virtually no domestic production, with a major new fertiliser plant, Perdaman's Project Ceres in Western Australia, not expected to come online until 2027.
More than half of Australia's urea imports come from United Arab Emirates, Qatar and Saudi Arabia, countries all impacted by the conflict and shipping disruption. According to sources in the agriculture sector, available urea could cost up to A$1000 per tonne by the coming planting season, up sharply from around A$850 before the war.
Farmers face difficult choices. Urea rates of 100-400kg per hectare for cereals are common, and canola can require more. Some growers report they are already "crunching the numbers" to determine whether planting at projected urea costs remains viable at expected grain prices. Even modest reductions in nitrogen use can produce disproportionately large declines in yield, which could translate into millions of tonnes of lost crops.
It bears noting that previous urea price shocks have not immediately translated to higher supermarket prices in high-income countries. In high-income countries such as Australia the price of food is largely determined by the cost of processing, packaging and marketing, not the prices paid to farmers. However, the broader economic impact remains significant. Winter crop planting is starting soon, and supply uncertainty compounds existing cost pressures on the sector.
The fundamental problem is that policy measures alone cannot resolve what is, at its core, a geopolitical standoff. Tanker traffic must resume through the Strait of Hormuz to bring stable oil and gas flows back to the global market. Until shipping resumes or an alternative emerges, the world's energy-intensive agriculture will remain exposed to the disruptions emanating from the Persian Gulf.