The Strait of Hormuz closure amid the Iran war pushed up freight, insurance and fuel costs just as coffee supply was improving

 

Coffee markets rarely move for one reason. In early 2026, they faced two forces at once: global supply was improving, but the Iran war and the closure of the Strait of Hormuz made moving coffee more expensive, slower, and riskier. The result was not an immediate shortage of beans it was a cost shock that worked its way through freight, insurance, fuel, and eventually landed coffee prices.

Supply was improving

By March 2026, the International Coffee Organization noted that the global supply outlook was continuing to improve. Brazil and Viet Nam had stronger production prospects, and coffee prices had been easing from earlier highs.[1][2]

For roasters and importers, that should have been good news. More coffee in the pipeline usually means less pressure on green-bean prices and more room to plan purchases calmly.

But supply is only half of the equation. Coffee still has to move from origin to warehouse, and that journey had become more complicated.

Hormuz changed the cost equation

The Strait of Hormuz was declared closed to vessels allied with the United States on 4 March. The disruption sent Brent crude above $100 per barrel within days, sharply raised bunker-fuel costs, and pushed container-freight rates and insurance premiums higher.[1]

The ICO Composite Indicator Price rose 2.3% in March to an average of 273.70 US cents per pound. By 9 March, it had climbed to 278.77 cents, a 4.3% gain in only five trading days.[1]

That rise was not mainly because coffee disappeared. It happened because the market began pricing in risk: longer voyages, higher fuel bills, delayed vessels, and uncertain insurance coverage.[1][3]

Freight and insurance costs rose

Shipping costs increased even on routes with no direct Middle East exposure. Analysts cited by StoneX estimated that global spot ocean-freight rates had risen roughly 30–40% since late February.[4]

Carriers including Maersk, CMA CGM, and Hapag-Lloyd diverted some Asia–Europe and Gulf-linked services around the Cape of Good Hope. Those detours added 25–30 days to end-to-end transit times, stretching journeys that normally take just over a month into trips approaching two months.[4]

Insurance became another pressure point. War-risk premiums for Hormuz transit reportedly rose from about 0.125% of hull value to between 1% and 7.5%, meaning an additional $2–15 million per transit for a very large crude carrier valued at $200–300 million. Those costs do not stay with shipping lines; they are passed through freight rates and surcharges to traders, importers, and eventually roasters.[4][5][6]

Why coffee felt the impact

Most coffee does not physically pass through Hormuz. But the strait is a major global energy chokepoint, with around one-fifth of the world’s oil supply passing through it. When it closes, fuel, fertilizer, transport, and insurance costs rise across the wider economy.[3][7]

For coffee, the effects are indirect but real:

- Higher bunker fuel increases ocean-freight rates.

- Longer routes delay Vietnamese, Indonesian, and East African shipments.

- War-risk premiums raise insurance and freight surcharges.

- Higher fuel and fertilizer costs increase production and inland logistics expenses.[3][6]

The ICO has said Hormuz instability is unlikely to cause a direct coffee shortage, but it can raise supply-chain costs through fuel, fertilizer, insurance, and freight disruption.[3]

The uncomfortable timing

The irony was that coffee supply was improving just as logistics became more difficult. Better harvest expectations should have lowered pressure on prices. Instead, the Hormuz closure injected a new risk premium into the market.

The ICO described the March market as absorbing two opposing forces: improving supply on one side and the Hormuz shock on the other. That is why prices did not simply fall in line with better production news.[1]

What buyers should do

For roasters and importers, the lesson is not to panic-buy. It is to manage logistics risk as deliberately as green-coffee risk.

That means reviewing landed cost, not just C-market price; diversifying shipping routes where possible; building realistic buffer stock without tying up excessive working capital; and working with suppliers who can provide visibility on vessel schedules and delays.[4][6]

Coffee supply may have been improving, but the Hormuz closure proved again that a good harvest does not guarantee a cheap or predictable cup. In today’s coffee trade, geopolitics can raise the price of a bean before it ever reaches the roaster.

Citations:

[1] I-CIP rebounded in March following geopolitical shock, ... https://www.ico.org/documents/cy2025-26/cmr-0326-e.pdf

[2] Strait of Hormuz: Beverage impact on tea, coffee, sugar https://www.beveragedaily.com/Article/2026/04/02/strait-of-hormuz-beverage-impact-on-tea-coffee-sugar/

[3] ICO economist on Hormuz risks for coffee: Cost pressures loom, but shortages unlikely https://www.foodingredientsfirst.com/key-interviews/hormuz-instability-coffee-sector-costs-ico.html

[4] Shipping Disruptions Continue to Reshape Coffee Logistics in 2026 https://www.stonex.com/en-us/insights/shipping-disruptions-continue-to-reshape-coffee-logistics-in-2026/

[5] www.monckton.com · wp-content · uploadsTHE US-IRAN CEASEFIRE: IMPLICATIONS FOR MARITIME, COMMODITIES ... https://www.monckton.com/wp-content/uploads/2026/04/US-Iran-Ceasefire-Article.pdf

[6] Geopolitical shocks are reconfiguring the Swiss industry's coffee supply chains https://www.swissinfo.ch/eng/food-supply-chains/geopolitical-shocks-are-reconfiguring-the-swiss-industrys-coffee-supply-chains/92244668

[7] ICO economist on Hormuz risks for coffee: Cost pressures ... https://www.foodingredientsfirst.com/news/hormuz-instability-coffee-sector-costs-ico.html

[8] Trump calls El-Sayed a 'jihadist' in Michigan; Sanders denounces 'racist attacks' https://www.reuters.com/video/watch/idRW324726102026RP1/

[9] Africa food security under threat due to Iran war, trade officials warn https://www.aljazeera.com/news/2026/10/26/africa-food-security-under-threat-due-to-iran-war-warn-trade-officials?ref=upstract.com

[10] America’s Least Bad Option in Iran https://foreignpolicy.com/2026/10/26/iran-war-trump-options-escalation-blockade-hormuz/?tpcc=recirc_right_rail051524

[11] US consumers paying the most for fuel price spikes from Iran war, study says http://rmb.reuters.com/rmd/rss/item/tag:reuters.com,2026:newsml_KCN3W62FX?channel=FES376

[12] How Middle East war is driving up shipping costs https://www.thedailystar.net/business/economy/news/how-middle-east-war-driving-shipping-costs-4141346

[13] Disruptions Continue for Global Coffee Logistics https://stir-tea-coffee.com/tea-coffee-news/disruptions-continue-for-global-coffee-logistics/

[14] Strait of Hormuz disruption raises iron ore costs | S&P Global https://www.spglobal.com/market-intelligence/en/news-insights/research/2026/03/strait-of-hormuz-iron-ore-cost-impact

[15] Ship insurers juggle war risks for perilous Gulf route | The Daily Star https://www.thedailystar.net/business/global-economy/news/ship-insurers-juggle-war-risks-perilous-gulf-route-4138751

[16] Global freight and logistics remain volatile as fuel costs ... https://www.freshplaza.com/north-america/article/9831917/global-freight-and-logistics-remain-volatile-as-fuel-costs-stay-elevated/

[17] Global freight and logistics remain volatile as fuel costs stay elevated https://www.freshplaza.com/asia/article/9831917/global-freight-and-logistics-remain-volatile-as-fuel-costs-stay-elevated/

[18] How the Strait of Hormuz Crisis Is Still Reshaping Your Cup of Coffee https://www.linkedin.com/pulse/ho

w-strait-hormuz-crisis-still-reshaping-your-cup-coffee-melvin-chew--ne0mc