Israel-Iran Conflict

FEWS NET does not maintain an operational presence in the countries covered in this report with the exception of Yemen. As such, its monitoring of food security conditions relies on remote information sources. The information presented is current as of June 26, 2025, at 5:00 PM Eastern Time.

The region¹ is mostly characterized by arid to semi-arid agroclimatic zones receiving less than 250 mm of rainfall annually; however, there are coastal zones receiving around 1,000 mm of rainfall annually. About 60-90 percent of the population lives in cities, making urban-based livelihoods the dominant livelihood system. Salaried employment and informal wage labor are the mainstay of livelihoods, although farming remains integral to rural livelihoods. For poor households, the main sources of income are informal wage labor, trade (small businesses and petty trade), crop/livestock sales, self-employment, remittances, and cash transfers for refugees and internally displaced persons. Prolonged insecurity has resulted in increased informal employment as a primary livelihood. While agricultural production is an important source of income for rural households, especially in Syria, Iran, and Iraq, crop production is limited to areas that receive sufficient rain and/or can be irrigated. Poor households across the region primarily depend on market purchases to access food, making them highly vulnerable to both market disruptions and income shocks. Wheat and barley are the key staple commodities, supplied through local markets and imports.

On June 12-13, Israel initiated "Operation Rising Lion," a multipronged campaign against Iran's nuclear program, Islamic Revolutionary Guard Corps (IRGC) leadership, missile launch sites and vehicles, and missile stockpiles. These strikes resulted in a significant degradation of IRGC leadership, killing key military figures and contributors to the country’s nuclear program, and significantly damaging Iran's air defense and missile capabilities, according to Israel Defense Forces (IDF) leadership. Subsequent strikes also targeted Iran's Natanz and Fordow nuclear facilities as well as oil infrastructure, with Israel threatening further escalation and urging evacuations in parts of Tehran.

In response, Iran launched hundreds of drones and missiles at Israel between June 14-16, most of which were intercepted, though some impacted Tel Aviv, Haifa, and central Israel. Iran's proxies, including Hezbollah and Popular Mobilization Forces (PMFs) in Iraq and Syria, have largely refrained from joining the retaliatory barrages, though Ansar Allah launched some intercepted drones and a missile that struck the West Bank. By June 17, Iran’s retaliatory capabilities had been significantly degraded by Israeli operations, but Iran continued to launch small salvos at Israel that struck major cities. Amid escalating hostilities, the U.S. significantly expanded its military presence in and around the Middle East, including deploying an additional aircraft carrier strike group, dozens of aerial refueling tankers, and more fighter aircraft.

On June 21, the U.S. launched strikes against Iran’s Fordow, Isfahan, and Natanz nuclear facilities. In response, Iran fired a barrage of missiles towards Al-Udeid military base in Qatar on June 23, though the attack was largely symbolic and caused no casualties. Shortly after, U.S. President Donald Trump announced a “complete and total ceasefire” between Israel and Iran. The precise terms of the deal remain unconfirmed, and although Israel and Iran continued to exchange attacks after the ceasefire came into effect, by June 24 both sides signaled a willingness to adhere to the ceasefire.

Market fundamentals for oil and shipping prior to conflict

The global shipping market has been facing a period of elevated risk and volatility, driven by weaker cargo demand, structural over-supply of hull capacity (dry bulk and tanker), trade policy uncertainty, and persistent security shocks in the Red Sea. Dry bulk trade experienced a mix of growth and volatility during the first half of 2025. Rates surged in the first quarter due to seasonal factors combined with geopolitical disruptions, fell slightly in April when the 90-day pause on reciprocal tariffs reduced Chinese coal and grain demand, and rose marginally in May. The U.S.-China tariff truce triggered a one-time 277 percent jump in China-to-U.S. container bookings in mid-May, though this is likely a timing distortion rather than a lasting demand boost. Global geopolitical instability and conflict-driven risks in the Red Sea and the South China Sea have led risk premiums to rise from 0.1 percent of hull value to 0.5-0.7 percent for most cargo, and up to 2 percent for U.S. and U.K.-linked vessels. This represents a five-to-twenty-fold increase in cash terms. Major commercial shipping companies continue to avoid the Red Sea despite a U.S.-brokered ceasefire with the Ansar Allah, and traffic through the Suez Canal remains 60 percent below normal levels. Even with a 15 percent discount offered by the Suez Canal Authority, container ship transits in May totaled just 141, a near-average figure compared to the first quarter of 2025, suggesting sustained rerouting via the Cape of Good Hope.

The Middle East is a key shipping corridor for global oil, with the Strait of Hormuz handling approximately 18-19 million barrels per day (mb/d) and over 500 million barrels per month in oil exports. The Middle East accounts for over 10 percent of global dry bulk trade volumes, the primary shipping method for staple foods.

Oil markets are currently oversupplied, as the IEA's May Oil Market Report confirms a global surplus of 1.6 mb/d through 2025, with inventories increasing at a rate of 720,000 barrels per day. The surplus is mainly driven by reduced global demand projections, resulting from a global growth slowdown, reduced industrial demand in China, and record electric vehicle adoption. Spare production capacity also remains ample. OPEC’s June report estimates spare capacity at 5-6 mb/d, with 3-3.5 mb/d deployable within 30 days. These fundamentals have been reflected in recent price movements. Brent crude prices declined for four consecutive months before June, falling from around 80 USD/barrel (bbl) in January to an average of 64 in May. Iranian production does not significantly factor into the global outlook, contributing approximately 3 percent of the global supply at 3.2 mb/d.

Shipping, oil, and fertilizer market reactions to the conflict

While no commercial vessels have been directly targeted, the June 13-16 decision from the Combined Maritime Forces to focus on only wartime activity underscored the level of concern for maritime security in the Strait of Hormuz and the Red Sea. As of June 16, physical shipping flows through the Strait of Hormuz and the Red Sea were unchanged and the Strait of Hormuz remained operational. However, during the week of June 17, AIS data showed repeated GPS-jamming events off Bandar-e Abbas, producing visibly slow traffic bunched at the Strait’s exit. On June 22, the Iranian parliament passed a non-binding motion urging the Supreme National Security Council to close the Strait of Hormuz to hostile shipping, a measure that can only be authorized by the Supreme National Security Council and Ayatollah Khamenei.

The shipping market’s reaction has been driven more by perceived risk than actual disruption. Spot freight rates for oil tankers have surged, and war-risk insurance premiums have widened, particularly for vessels transiting the Gulf and Red Sea corridors. A U.S.-brokered ceasefire announced late on June 23 triggered an immediate easing to shipping markets. Very Large Crude Carrier (VLCC) earnings, which spiked at approximately 78,000 USD per day on June 21, fell by about 10 percent within 48 hours as brokers saw war-risk insurance quotes starting to fall below the recent 0.5 percent peak. Traffic through the Strait remains unchanged from normal levels.

Israeli drone strikes on June 14 targeted Iranian domestic gas infrastructure – South Pars Phase 14 and Fajr-e Jam plants, plus two fuel depots – but left all crude export facilities operational. No export barrels were lost. The Strait of Hormuz maintained normal flow at 18-19 mb/d throughout the escalation, despite extreme GPS/AIS interference that spooked shipping operators. Kharg Island's loading terminals and Jask export routes continued to operate without interruption. Between June 13 and 16, in response to these events, global oil prices increased 7 percent to 78.50 USD followed by a retreat to 72-74 USD. The immediate price spike and retreat was an initial market reaction to uncertainty and freight costs, not to any change in market fundamentals. The production buffers in oil markets and confirmation that physical oil flows remain unaffected explain why the immediate price spike reversed within 48 hours. VLCC spot rates from the Gulf to Japan jumped 20 percent, while war-risk premiums added 3-8 USD per barrel. These are substantial but manageable costs that Lloyd's insurers continue to underwrite. This transmission mechanism is consistent with historical patterns, as risk-hedging behavior flows through financial and insurance markets to impact shipping costs before any actual change in crude availability occurs. Brent crude dropped more than 7 percent on Monday, June 23 from the previous week’s peak, reflecting broad recognition that a significant long-term disruption of traffic through the Strait of Hormuz is unlikely.

The current global oil production cushion would require at least 2 mb/d of sustained outage to flip the market into deficit, far exceeding any realistic Israeli strike scenario. Saudi Arabia alone could offset a complete loss of Iranian exports without straining the system. Finally, the Iranian state’s heavy dependence on oil revenue, 90 percent of which comes from Chinese customers, significantly constrains the strategic value of any disruption to oil flowing through the Strait of Hormuz.

Iran supplies approximately 3.5 percent of global urea and about 10 percent of seaborne urea trade volume. Fertilizer markets initially reacted to the potential for hostilities to disrupt Iranian urea supplies, with Gulf urea prices up 17 percent June 14 and 15. There was a physical disruption to Egyptian urea exports following Israeli action on June 13 to shut down the Leviathan and Karish gas fields, which has implicated 8-10 percent of global export availability. July is a key period for fertilizer tenders and will be the first point at which a definitive price shock can be identified.

Conflict

The conflict between Israel and Iran is likely to abate in both frequency and intensity, following a U.S.- and Qatari-mediated ceasefire that took effect on June 24. Both sides initially accused each other of violating the truce, citing Iranian missile strikes on Israel and intense Israeli Air Force (IAF) strikes on Iranian military infrastructure, including in Tehran, in the hours leading up to the agreement; major combat operations appear to have halted. Iran is expected to cease large-scale ballistic missile and drone attacks on Israel in the near term. Israel, facing mounting international and domestic pressure, including direct appeals from U.S. President Trump, is likely to similarly refrain from further large-scale airstrikes on Iran in the coming weeks.

However, Iran-aligned groups (Ansar Allah in Yemen, and Iran-backed militias in Iraq and Syria) are likely to continue to conduct sporadic operations. In Yemen, Ansar Allah announced that the June 24 ceasefire between Israel and Iran did not include them, and that their attacks against Israel would continue until the cessation of Israeli military operations in Gaza. Ansar Allah will likely continue symbolic, low-impact strikes, prompting Israeli retaliation targeting leadership and strategic infrastructure. In Iraq and Syria, Iranian-backed militias are moderately likely to carry out sporadic rocket or drone attacks against Israel, and potentially U.S. forces, though these are unlikely to cause major damage. In Lebanon, Hezbollah is unlikely to escalate, fearing further weakening by IDF strikes. In Gaza, while ceasefire talks are expected to resume in the medium term, the June 23 truce between Israel and Iran is likely to prompt an intensification of conflict in Gaza in the short term, as the IDF redirects military resources previously committed to the Iranian front towards operations against Hamas, aiming to achieve tactical gains while international attention remains largely focused on Operation Rising Lion and the subsequent ceasefire. Although the Egyptian government expressed concern about regional stability following the exchange of strikes, the impact on domestic conflict dynamics in Egypt is expected to be minimal. Security is likely to remain heightened in South Sinai in the short term amid local backlash against an influx of Israeli nationals fleeing the Israel-Iran conflict, though the continued ceasefire will likely result in the majority of these nationals returning to Israel over the coming weeks.

Markets and trade

On June 25, Brent crude oil was trading at 68 USD a barrel, as markets responded both to the ceasefire announcement and broader market and economic activity, including the potential for a reduction in U.S. interest rates that could spur economic growth and increased oil demand. If the ceasefire holds, Brent crude is likely to trade between 65 and 70 USD over the next few months, with shifts driven more by broader macroeconomic concerns than the Iran-Israel conflict. Continued uncertainty in the Strait of Hormuz or the Red Sea could continue to support elevated shipping insurance premiums. This is predicated on base scenarios for the 2025 oil market outlook from JP Morgan, Goldman Sachs, and Wood Mackenzie, and if there is a transient shock, this could adjust by 5-10 USD/bbl. This shock adjustment estimate is due to spikes in war-risk insurance premiums, persistent Red Sea shipping detours, swelling global oil stocks, and ample spare OPEC+ capacity. The chronic risk premium for Red Sea tanker traffic will likely continue to constrain traffic, which is at about half of its pre-2024 levels. Lloyd’s underwriters continue to treat the corridor as a Joint War Listed Area. Current hull-and-cargo war-risk surcharges add approximately 0.50-0.80 USD per barrel and would increase to 2-3 USD if Ansar Allah drone activity re-intensifies. While not a supply loss, the Red Sea risk premium could plausibly push Brent to the top of the 80-90 USD range even with global inventories rising.

Security issues in the Strait of Hormuz remained a concern at the end of June despite the ceasefire, with reports that GPS jamming incidents may still be occurring. Rates for shipments through the Strait significantly increased ahead of the ceasefire but have fallen since the announcement. With no alternative routes for the Strait of Hormuz, price spikes and drops could continue if there are perceived threats to the ceasefire and consistent safe passage through the Strait. At this point, it is unlikely that there will be sustained disruption in dry bulk shipping through the region sufficient to affect food commodity markets. Ten percent of global dry bulk trade passes through the Middle East, meaning any impacts would be relatively minor relative to fundamental market drivers.

The spike in Gulf urea prices is expected to be short-lived and similar to the market reaction to shutdowns in Iranian supply between January and March of this year related to natural gas supply issues. This three-month outage impacted just 0.5 percent of global demand. The physical losses from Israeli strikes thus far have impacted less than 0.1 percent of global export volume. While supply itself is not threatened, as with oil, war-risk cover for Red Sea and Strait of Hormuz transit is likely to have an impact on spot pricing for seaborne fertilizer tenders. The market response to reductions in Egyptian urea should become evident in July, as markets also adjust to an easing of the Chinese export ban for nitrogen products, with a quota system in place between May and September 2025. If supply from China is consistent during this period and expands later in the year, then reductions in available exports from Egypt and Iran can be backfilled. This shift in supply routes would also benefit buyers east of the Suez, as they are spared the risk premiums associated with Red Sea and Hormuz shipping routes.

Food security impacts

The conflict between Iran and Israel is expected to have minimal impacts on food security in both countries, as well as within the broader region and globally, given the ongoing ceasefire and the likely abatement in conflict intensity and frequency. While spillover effects such as rising food and fuel prices may temporarily strain import-dependent economies and subsidy systems, these impacts are likely to be short-lived based on the ongoing ceasefire and as operations by Iran-aligned groups in Yemen, Iraq, Syria, and Lebanon are expected to remain sporadic and at low intensity.

In Israel, no notable impacts to food security are expected, given the country’s diversified economy, integrated market, and continued flow of imports from the global market. In Iran, while urban households remain vulnerable to economic shocks due to their high reliance on markets, their access to food is unlikely to be significantly impacted by this recent conflict given that conflict has largely halted. Rural households were largely unaffected, given that agricultural infrastructure was not a key target.

In the broader region, minimal to no food security impacts are expected, despite largely fragile economies within neighboring countries. Drawing on Egypt as an example, the country’s economy is recovering from its eighth balance of payments crisis in as many decades. A national bread subsidy program supports 71 million citizens, and the country hosts nearly 1 million refugees (primarily Sudanese) who lost UNHCR rations with recent global aid funding cuts. Despite these vulnerabilities to fiscal shocks, current market dynamics favor stability. The military-run Mostakbal Misr company has authority over wheat imports and maintains strategic stocks that cover four to five months of consumption. Oil prices remain manageable, and a 20 percent cost buffer in Egypt’s 2025 budget is sufficient to absorb increased production costs. While currency depreciation is a plausible pathway by which access to food would decline, the 2024 EU-IMF-UAE bailout packages suggest that the international community is willing to provide assistance to Egypt. The return of large vessel traffic through the Suez Canal also boosts public revenue and supports currency stability. A potential fiscal hit from Israel’s June 12 cutoff of natural gas to Egyptian fertilizer plants is unlikely to outweigh expected capital inflows from Gulf allies. Finally, political constraints make austerity measures highly unlikely to impact bread subsidies. Altogether, these factors signal that significant economic impacts – and related food security consequences – are unlikely in Egypt, and the outlook is similar across neighboring countries.

The exception to this is Gaza, where the conflict between Israel and Iran has only underscored the level of concern for acute food insecurity given that the population is already experiencing extreme starvation. Following the announcement of the ceasefire on June 24, the IDF confirmed that its focus would pivot back to operations in Gaza. While the scale of ground operations in Gaza will be partially tempered by the IDF’s recent redeployment of ground forces from Gaza to Israel’s northern and eastern borders, it is still expected that the IDF will intensify its campaign against Hamas in the short term to gain leverage before further ceasefire negotiations, and while international attention remains diverted away from Gaza. The diversion of global attention away from Gaza will likely reduce the momentum of international pressure on Israel to end the war in Gaza in the short term. This, combined with the anticipated intensification of the IDF campaign, is expected to impede a substantial increase in the delivery of humanitarian food and nutrition assistance, upon which famine prevention efforts depend.

At the global level, the impacts are also expected to be minimal. While there is potential for short-term volatility in global food and fuel prices, the overall contribution of Israel and Iran to global food supply chains and commodity flows is relatively limited. As such, any impact of these disruptions is not expected to be significant enough to drive notable deterioration in food security outcomes at the global level.

While continued adherence to the ceasefire is considered the most likely scenario, there is a low-to-moderate likelihood of the conflict resuming following a temporary cessation of hostilities. In this scenario, should either Israel or Iran be accused of breaking the ceasefire, the IDF would likely resume airstrike campaigns aimed at further degrading Iran's ballistic missile capabilities. The IDF would also likely target sites associated with Iran's nuclear program, IRGC leadership, and Iranian military installations to hinder Iran's efforts to reconstitute its forces and reduce Iran’s capacity to further strike Israel. In this scenario, Iran would likely resume ballistic missile barrages similar to those observed from June 17-23 aimed at imposing costs on Israel for continued hostilities. However, given recent losses, it is unlikely these barrages would be as large as those observed on June 13-14 or during earlier drone and missile attacks in April and October 2024.

In this scenario, the possibility of an attempted blockade of the Strait of Hormuz increases; however, the likelihood of a successful blockade is very low, given Iran’s naval capacity and its reliance on the Strait for trade. At the height of the Tanker War between 1984 and 1988, a full closure was never achieved, and the sheer size of the Strait, along with the limited capacity of the Iranian navy, are key limiting factors for any sustained blockade. A short-term reduction of 20 percent or more in traffic through the Strait driven by spikes in insurance rates for a matter of weeks is plausible but unlikely, and its impacts on oil prices would likely be limited to pushing prices around 90 USD for a short window before channels are secured and the dominant fundamental drivers, global surplus supply and reduced demand, push prices back down close to pre-conflict levels. Tanker freight rates could jump significantly for a few days, but the spike would likely subside as convoys facilitate increased traffic and substitute barrels from UAE and Saudi pipelines become available.

In the event of this renewed escalation of conflict between Iran and Israel, moderate impacts to food security could be expected in Iran, and concern would remain extremely high for Gaza; however, food security impacts would remain unlikely in Israel, neighboring countries, and globally.

In Iran, renewed airstrikes targeting densely populated urban areas would likely disrupt markets and trade routes, contributing to price increases and volatility, particularly in urban centers. Urban households, which are highly market-dependent, would face constrained purchasing power due to rising food prices; the loss of income associated with disruptions to economic activities; casualties (i.e., the loss of household income-earners); and displacement away from economic centers. While rural areas would be less likely to see direct effects, any extension of conflict into agricultural zones or the targeting of Iran’s agricultural infrastructure, such as hydroelectric dams, could disrupt agricultural production. Overall, while the severity of food security impacts in Iran would still be moderate under this scenario, the scale and magnitude of acute food insecurity would ultimately depend on the duration, intensity, and geographic scope of renewed conflict.

In Gaza, the redirection of IDF assets to the Iran front would likely result in a temporary reduction in larger-scale IDF combat operations in Gaza. This development may partially alleviate the severity of mobility restrictions on the population and partially increase household access to food assistance distributions. However, the momentum of international pressure on Israel to end the war and increase food and nutrition assistance would likely reduce further.