Middle East conflict pushes soybean oil prices higher as shipping risks grow
Threats around the Strait of Hormuz raise energy costs and ripple through oilseed markets.
USA – Rising tension in the Middle East has lifted energy and soybean oil prices as threats to shipping through the Strait of Hormuz disrupt one of the world’s most important sea routes.
US and Israeli forces attacked targets in Iran on Feb. 28. Soon after, Iran broadcast warnings to ships approaching the Strait of Hormuz. Iranian authorities told vessels not to pass and threatened to burn any ship that tried to cross.
The Strait of Hormuz forms a narrow sea passage that links the Persian Gulf with the Gulf of Oman and the Arabian Sea. Iran lies to the north of the strait, while the United Arab Emirates and an exclave of Oman control land to the south.
Ships leaving ports in Iraq, Kuwait, Bahrain, Qatar and the United Arab Emirates must pass through this route. Around 3,000 vessels move through the strait each month, carrying crude oil, refined fuel and liquid natural gas to markets such as China, India, Japan and South Korea.
US President Donald Trump said the US Navy would escort ships if needed. He also said the United States Development Finance Corp. would provide political risk insurance for shipping companies at what he described as a reasonable price.
Higher energy prices have already pushed up fuel costs in the United States. Retail gasoline prices often rise about 2.5 cents for every US$1 shift in crude oil prices.
Soybean oil markets reacted quickly because traders link vegetable oils closely with energy markets.
“When heating oil goes crazy, soybean oil follows, and that’s what’s happened there with the soybean oil market,” said Bill Lapp, chief economist at Advanced Economic Solutions in Omaha, Nebraska.
Lapp added that other policy decisions could also shape soybean oil prices in the months ahead. “Soybean oil itself is impacted by this, but it’s also at least as much impacted by what the Environmental Protection Agency is going to tell us the biofuel regulations are,” he said.
Market signals from global trade
Grain markets also reacted to political developments tied to the conflict. Chicago soybean futures rose after a sharp drop the day before as traders assessed reports that a planned meeting between Trump and Chinese President Xi Jinping may face a delay.
A delay could weaken hopes for stronger US soybean sales to China. However, officials from both countries held stable talks in Paris on agriculture trade issues.
Meanwhile, China still plans to buy 25 million metric tons of US soybeans each year for the next three years under the October 2025 trade truce.
Supply signals also shape the market. US processors crushed 208.785 million bushels of soybeans in February, well above last year’s level. In South America, tighter quality checks and higher freight rates have slowed offers of Brazilian soybeans to China while farmers continue harvesting the current crop.
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