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War On Iran: – U.S. Experiencing Price Increases
The stalemate in the War of Iran is characterized by bets on each side that the enemy side will soon incur unsustainable economic problems.
After several wars and decades of sanctions Iran is well versed in how to sustain under economic pressure. Its people and government know of the larger picture. Price fluctuations are inconveniences but do not change the will of the people.
The U.S. on the other side is rather fragile. Even only mildly unconformable circumstances will lead to political pressure. One percent more or less of inflation will change the election chances for this or that party.
The consequences of the blockade of Hormuz are starting to come in:
US inflation jumps to 3.8% as energy costs surge from Iran war – BBC
US prices rose in April at their fastest rate since May 2023 as the impact of the war in Iran was increasingly felt by consumers.
A jump in the cost of gasoline and groceries pushed the consumer price index (CPI), showing the rate prices rose by in the past 12 months, to 3.8%.
It is the highest level since inflation hit 4% three years ago.
The Bureau of Labor Statistics (BLS) said almost half of the rise was driven by surging energy costs, while housing and food costs also contributed.
Consumer inflation can be a short term trend. More worrying than the rise in the CPI is the increase of input prices as reflected in the Producer Price Index (PPI):
Wholesale inflation jumps 6% in April on annual basis, biggest increase since 2022 – CNBC
Wholesale prices in April posted their highest annual increase in more than three years, signaling more nettlesome inflation as pipeline costs intensify.
The producer price index rose a seasonally adjusted 1.4% for the month, much higher than the 0.5% Dow Jones consensus forecast and the upwardly revised 0.7% March increase, the Bureau of Labor Statistics reported Wednesday. This was the largest monthly gain since March 2022.
On an annual basis, the index was up 6%, the biggest increase since December 2022.
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Energy was at the root of the unexpectedly high gain in producer prices, as it was for a surge in consumer prices that the BLS reported Tuesday, though there was evidence that the price pain is extending beyond the gas pump.
Each of the goods missing due to the blockade of the Strait will lead to price increases. Some increases, like those for refined petroleum products – gas and diesel, will show up immediately. Lack of others products, like naphtha, sulfur and urea, will take several months to be felt.
Soon products will start to vanish from stores. Lubricants, like motor oil and grease, are candidates. Several of the myriads of plastics we are used to use will soon be missing.
What are you going to do if waste bags are missing?
Each lack of a product has its own consequence, sometimes in unexpected places. Here its is the housing market in Japan from where trouble might well flow into financial markets:
Hormuz closure stalls construction projects as material costs soar (archived) – FT
Masatomi Maeda, chair of Hiroshima-based Maeda Housing, said about a quarter of its projects have been delayed within the past month as suppliers could not confirm delivery dates for goods including PVC piping, insulation materials and prefabricated bathrooms.
Builders say the absence of a single part, adhesive or material is enough to hold up an entire project.
“We have around 20 contracted projects that we can’t start work on smoothly,” said Maeda. “We already expect completion payments to be delayed by two or three months. If two months of sales disappear, I think there will be companies who won’t have enough working capital.”
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Yoshihide Kimura, chief executive of Toyama-based contractor Tomiso, said that emails and faxes poured in last month notifying him of “extraordinary” increases. PVC prices, for example, jumped as much as 70 per cent, he said.
Kimura said that his firm could not pass on the costs to customers, as they would need to renegotiate housing loans, and the uncertainty was causing customers to hold back.
“Everyone feels stuck,” he said.
Even if the Strait would reopen tomorrow it would take twelve to eighteen months for oil wells to be pumped again, storages to be refilled and production chains to go back to normal. As the conflict is likely to re-ignite we can expect years of supply problems.
Today’s increase of CPI and PPI numbers is just the beginning of larger increases in the cost of living.
@110 monstrous
“I tend to think that many of the solutions offered, like switching from Amazon to Alibaba, using sewage or pig/horse/chicken poop as a replacement for standard fertilizers, and sitting under a tree as a replacement for air-conditioning in hot climates are boutique solutions favored by PMC-class westerners who have a “liberal” mindset.”
Maybe so, and as AUH points out many of these ideas are not scalable in modern setting. What many also miss is that the delays in transitioning to alternate techniques are not acceptable, and particularly at large scale corporate level.
There are methods to provide chemical fertiliser without fossil fuels for example, one I was reading was already in construction, but that is three years until functioning
https://www.filtercoffee.co/stories/reliance-just-solved-green-hydrogens-biggest-problem
So that leaves only one choice if there is shortage, which is why it is being discussed. It might make some difference to some.
For myself, I know how various peoples used to live, in some places still do, and have also spent time living as so. It is not some dream ideal, it is based often on minimalism, conservation of energy or resource, patience . In hot climates the heat of day is for rest, everything happens more slowly, it is a way of life more than a solution to no air conditioning. Same with fertilisers, people must (and did) use what was available to guarantee subsistence. The difference between no fertiliser or soil improvement and even most basic efforts can be enormous, can be the difference between a good crop and no crop at all. At large scale the difficulty of adaptation to changes are large, but small scale, or even just self suffiency, are not.
Complex systems, globalism, corporate management and high productivity to serve consumerism are just one end of the scale, and as being noticed, they have various weaknesses.
Populations becoming increasingly city orientated, places nearly full reliance on the larger systems of organisation, something those living more independently, often ruraly, cannot do much to resolve in any time of crisis. Not thinking of the US in particular, but countries that are in a less favourable position with regard.
Posted by: Ornot | May 14 2026 0:42 utc | 108
Posted by Tom Pfotzer. Subject: Some background on “fertilizer”.
Fertilizer is a general term. It means “nutrients the plants need that aren’t already in the soil they grow in, or aren’t provided by rain or air”.
Different plants use different nutrients. Fertilizer is generally characterized by:
a. it’s content of the three “macro” nutrients of Nitrogen (“N”), Potassium (“P”) and Potassium (“K”). The label on the fertilizer bag will say something like 10-10-10, which means that, by weight, the bag’s contents are 10% N, 10% P, and 10% K. The label on a bag of Urea fertilizer will be labelled something like 49-0-0, which means the bag is about 49% N by weight, and the rest is just filler. It contains no phosphorus or potassium. There are many, many different fertilizer formulations, but the bag is always labeled (at least) to tell how much, by weight, of the three macro nutrients that particular fertilizer provides.
b. The fertilizer may contain various “micro” nutrients. “Micro-nutrient” means that plants typically require much less of these nutrients relative to the plant’s requirements for the “macro” nutrients. Micro nutrients include sulfur, copper, boron, manganese, iodine, magnesium, iron and a few others.
N fertilizer can be synthesized from natural gas. It can also be obtained from animal waste (horse or goat or chicken droppings, or human waste) from dried blood, ground up fish, or ground up beans, or any other animal or vegetable matter that contains protein.
“Protein” is, chemically, just sugar (carbon, oxygen and hydrogen) with some nitrogen added in.
The principal chemical synthesis process employed to create urea from natural gas is called the Haber-Bosch method. That chemical synthesis process revolutionized farming because N availability and cost was the limiting factor of plant growth in most parts of the world. Cheap N was one of the main factors that made “the green revolution” possible.
Phosphorous and Potassium are generally obtained from high concentration mining deposits. Those deposits are large, fairly evenly distributed around the world, and are a finite material. The sustained cost of fertilizer will significantly and permanently rise when those high concentration deposits are depleted.
So when people say “there’s a fertilizer shortage” … that might mean that geopolitics is constraining or limiting the sourcing or distribution of one or another of the “macro” nutrients. Right now, because a lot of the Nitrogen fertilizer (usually in the form of urea) synthesis happens near natural gas deposits, and because that N is sourced near and shipped through the Gulf of Hormuz, we think “there’s a fertilizer shortage”.
Not exactly. There’s a reduction of supply, and reduced distribution of N fertilizer, one of the three macro-nutrients. That shortage is centered on the Gulf of Hormuz. But natural gas deposits are widely dispersed, and the urea synthesis plants, while expensive to build, are fairly well distributed around the world.
The big problem is that the reduction in supply and the constraints on distribution happened suddenly, and because the feedstock (nat gas) supply facilities were damaged in some places, the time to restore that lost production capacity is significant, maybe measured in years.
There are substitute sources of N, but they are more expensive, and aren’t as widely used, and don’t have well-developed supply chains to source and deliver these alt sources of N.
Posted by: Tom Pfotzer | May 14 2026 3:04 utc | 127
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