- Hormuz disruptions stall 2,60,000 MT of Iraqi rice shipments from Thailand
- Rising freight, energy costs may pressure Thai rice exports, farm economics
Escalating conflict in the Middle East and disruptions around the Strait of Hormuz are beginning to reshape global agricultural trade flows, with Iraq’s reported withdrawal from the Thai rice market emerging as one of the first major impacts on the rice sector. Thailand exported nearly 1 million tonnes (mnt) of rice to Iraq in CY’25, making Iraq its largest export destination; however, current shipping disruptions and regional instability have significantly hampered this trade flow. The halt in Iraqi purchases has raised concerns over regional supply chain stability, while increasing freight and insurance costs are adding further pressure to already fragile global food markets.
Iraq suspends Thai rice imports amid shipping uncertainty
Iraq, one of Thailand’s major rice buyers in the Middle East, has reportedly stopped importing Thai rice, with no significant shipments recorded in the past 3 months following heightened tensions in the Gulf region, impacting nearly 2,60,000 MT of rice exports from Thailand. The disruption is linked to the Strait of Hormuz becoming commercially difficult for shipping operators, as rising security risks have made vessel movement increasingly uncertain.
The Strait of Hormuz remains one of the world’s most critical maritime chokepoints, handling a substantial share of global energy and commodity trade. Shipping through the route has become more expensive due to sharply higher war-risk insurance premiums, rising bunker fuel costs, and vessel rerouting. In some cases, exporters are facing delayed deliveries, renegotiated contracts, and shipment cancellations.
For Iraq, which relies heavily on imported rice to support domestic food consumption, the interruption may increase pressure on local food inflation and supply security. The country’s broader economic vulnerability is also rising, as its oil exports – largely dependent on uninterrupted Gulf shipping — face parallel disruption risks.
Thai rice exporters face demand setback
Thailand’s rice sector could face immediate pressure from the loss of Iraqi demand, particularly at a time when exporters are already dealing with increased competition and softer global prices. Iraq has traditionally been an important destination for Thai rice, accounting for 10-12% share in total Thai Rice exports in recent years, prolonged disruption could weigh on Thailand’s 2026 rice export outlook.
Beyond rice exports, elevated energy costs are also affecting Thailand’s broader agricultural economy. Higher diesel and transport expenses are increasing cultivation and logistics costs, while weaker export demand may further compress exporter and farmer margins. The impact may also extend to other Asian rice-producing countries such as Vietnam and India, as shifting trade flows and rising input costs create additional uncertainty across regional markets.
Global commodity markets feel broader pressure
The implications of Hormuz disruptions extend well beyond rice trade. Rising crude oil prices and constraints on liquefied natural gas supply are already pushing up fertiliser production costs, particularly for urea, which is heavily dependent on natural gas feedstock. Higher fertiliser prices could further strain rice farmers across Asia during the ongoing planting season, adding to concerns around production costs and crop yields. Industrial commodities and shipping-dependent sectors are also facing renewed volatility as global supply chains adjust to the geopolitical shock.
Outlook
If disruptions in the Strait of Hormuz persist, the rice market could face a combination of trade diversion, higher freight costs, and shifting buyer preferences. Thailand may need to seek alternative markets to offset lost Middle East demand, while importers such as Iraq could diversify sourcing towards more accessible suppliers like India, Pakistan, Vietnam and others.
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