THE ECONOMIC IMPACT OF THE PERSIAN GULF CRISIS ON THE GRAIN MARKET

Abstract

Introduction. The ongoing conflict involving the US, Iran, and Israel has triggered a large-scale global crisis. Its most immediate consequence has been a surge in global oil and fuel prices. Currently, this conflict is viewed as a world-level crisis that has affected virtually every component of the grain market: from the cost and availability of key agricultural inputs to the direct logistics of finished products to the end consumer, as well as pricing mechanisms. This far-reaching impact underscores the relevance and urgency of this study.

Purpose. The purpose of the article is to analyze the impact of the current Persian Gulf crisis on the global and Ukrainian grain markets. The study focuses on both the direct link between the grain sector and the energy market, and the consequences brought about by the disruption or forced redirection of logistics supply chains.

Materials and Methods. The research materials include works by domestic and foreign scholars studying the operations of the global grain market; data from the CME Group platform; insights from an international price reporting agency Fastmarkets; reports from the Foreign Agricultural Service; statistical data from a Ukrainian analytical and consulting company Barva Invest and data from the State Statistics Service of Ukraine. The following methods were applied during the research: the dialectical analysis method (to identify interrelations between geopolitical, energy, and agricultural processes); the systems approach (to evaluate the grain market as a complex system intertwined with the energy market and logistics); comparative analysis (to identify price trend variations in the grain and energy markets and evaluate the regional impacts of the crisis); scenario modeling (to develop various paths for grain market development depending on the duration of the crisis); and simulation modeling (to forecast the impact of rising freight costs on the export cost price of Ukrainian grain).

Results. An analysis of price dynamics in the oil and grain markets was conducted, revealing a clear correlation between price fluctuations in these sectors. The study established that deferred demand has formed in the grain market, leading to a significant drop in overall trading activity across physical grain markets. It was determined that the increase in key grain prices did not compensate Ukrainian agricultural producers for the soaring costs of logistics. Furthermore, the study found that the negative consequences of blocking the Strait of Hormuz include a spike in nitrogen fertilizer prices and disruptions to crop application schedules, which could ultimately lead to a decline in grain yields. The impact of the crisis on grain demand from major importers in the Middle East was analyzed, alongside the import dynamics of key grain crops, thereby outlining future demand prospects for these commodities in the global market. It is concluded that despite rising prices in the grain market driven by higher energy costs, military risks could lead to a reduction in imports among Middle Eastern nations. The implications for grain market operations were evaluated under various conflict development scenarios.

Prospects. Future research prospects include a quantitative assessment of the impact of energy shocks on the logistics costs of Ukrainian exporters, scenario modeling for the fertilizer market, and the development of adaptive risk management strategies.