The conflict between the US and Iran is creating significant pressure on the global coffee market, primarily through increased production costs, US dollar volatility, skyrocketing fuel prices, and growing logistical uncertainty. In particular, the risk of disruptions at the Strait of Hormuz and the Suez Canal is escalating threats to vital trade routes.
The offensive by the United States and Israel against Iran at the end of February triggered a new wave of instability in the Middle East. As a result, oil prices surged—jumping 24% in just one week—while the USD also trended upward. Furthermore, Iran’s tightened control over the Strait of Hormuz poses a direct threat to the world’s strategic shipping lanes.
Impacts on Costs and Logistics
According to Laleska Moda, market intelligence analyst at Hedgepoint Global Markets, the coffee market is one of the sectors likely to suffer both direct and indirect effects from this crisis.
“The rise in oil prices and exchange rate volatility tend to drive up production costs,” she stated. “This stems not only from increased fuel consumption in farming operations but also from the rising costs of energy-dependent inputs such as fertilizers and pesticides. Simultaneously, escalating geopolitical tensions continue to strain global coffee logistics.”
In practice, hundreds of tankers and cargo ships remain anchored offshore or outside the Strait of Hormuz, unable to dock. This situation has directly impacted coffee shipments destined for roasters in the Gulf region, particularly the UAE, while reducing global vessel availability.
Threats to the Suez Canal
Additionally, increasing attacks on tankers are heightening risks for trade routes in the Gulf and the Suez Canal. Concerns over the potential recurrence of attacks in Yemen have forced many shipping companies to suspend or reroute operations away from the region.
The Suez Canal serves as a critical “bottleneck” in global coffee trade, as it is the optimal route for transporting coffee from East Africa (such as Uganda and Ethiopia) and Southeast Asia to the European market.
Pressure on the European Market
Logistical disruptions could directly impact trade flows and coffee price differentials, especially given that Europe is the world’s largest consumer market.
Recently, the European Union has increased its coffee imports from Asia (notably Vietnam) while expanding its sourcing from East Africa. This trend is further reinforced by the fact that Brazilian producers remain cautious and are not yet ready to ramp up sales.
Reports from Vietnam indicate that while shipping routes have not been interrupted, logistics costs have risen significantly. Some export shipments to Europe are being temporarily held domestically and will likely remain restricted until the risks associated with transiting the Suez Canal become clearer.
Furthermore, many shipping companies have stopped accepting bookings to the Gulf region and are rerouting vessels around the Cape of Good Hope, leading to substantially higher freight costs and extended delivery times.
Supply Outlook
While Europe can diversify its sources, the majority of natural Arabica and Robusta coffee still originates from Asia, Uganda, and Brazil. In the case of Brazil, producers are holding onto their remaining stocks, while the 2026/27 crop is not expected to reach the market until July.
This context could affect price differentials in Brazil, as well as import volumes and inventory levels in Europe—particularly if geopolitical tensions persist in the coming period.
