Before the war began, Tom Collins was paying about 65 pence per litre for red diesel — the agricultural-grade fuel used to run farm equipment in the UK. As of this week, he's paying £1.20 to £1.30 per litre, plus VAT.
Collins speaks for the National Farmers' Union in Wiltshire. He describes the change as an "overnight shock." His colleague Mike Catley, a dairy farmer running 250 cows near Calne, calls it "crippling." Catley normally orders 3,000 litres of diesel at a time. Now he's being limited to 1,000 litres per delivery — and it takes twice as long to arrive.
"If I don't fill the tractor, I can't feed the cows," he told BBC News. "Simple as that."
These aren't abstract economic statistics. They are farmers in southwest England describing, in plain language, the first-order impact of a military conflict 5,000 miles away. Understanding why this happens — and how quickly it moves through the food supply chain — requires tracing the exact transmission mechanism from a strait 21 miles wide to a supermarket shelf.
Step 1: The Strait
The Strait of Hormuz sits between Iran and Oman at the mouth of the Persian Gulf. At its narrowest it is 21 miles wide — about the distance from central London to Heathrow. Through it flows approximately 21 million barrels of crude oil per day, roughly 21% of global petroleum liquids consumption (EIA, 2022 data).
There is no practical alternative route for most of this volume. Pipelines that bypass the strait exist — the Petroline across Saudi Arabia, the Abu Dhabi Crude Oil Pipeline — but they have combined capacity of approximately 5–6 million barrels per day, less than a third of normal Hormuz flow. Rerouting tankers around the Arabian Peninsula adds 2,500–4,000 miles per voyage, increasing shipping time, tanker costs, and insurance premiums.
When the US-Israel conflict with Iran began 24 days ago, Iran began restricting Hormuz transit. Not a full blockade — tankers have continued to move — but a combination of declared military exclusion zones, raised threat levels, and spiked war-risk insurance premiums that have caused many commercial operators to reroute or anchor rather than transit. The effect on oil markets has been the same as a partial closure: supply uncertainty drives price speculation, which drives the futures price up, which drives the pump price up.
Brent crude, the global benchmark, has risen approximately 54% since February 28 (IEA).
Step 2: Why Farm Diesel Moved Faster Than Pump Prices
At ordinary UK filling stations, diesel rose by 24 pence per litre — approximately 17% — in the same period that farm diesel doubled, according to RAC Fuel Watch data cited by BBC News.
The reason is tax structure. Regular road diesel in the UK carries a fuel duty of 52.95 pence per litre (frozen at that level since 2011). When the underlying oil price rises by, say, 20 pence per litre, road diesel customers see that 20 pence added to a total price that was already heavily padded by duty. The percentage increase on the full price is therefore smaller than the percentage increase in the raw product cost.
Red diesel — the agricultural-grade fuel dyed red to prevent road use — is taxed at a much lower rate. It was historically taxed at 11.14 pence per litre (a rate that has varied over time). This means the raw product cost makes up a much larger share of the per-litre price. When the raw product cost doubles, the price farmers pay roughly doubles. There is less tax cushion to absorb the shock.
Pre-war: ~65p per litre. Post-shock: ~£1.20–£1.30 per litre. A farmer filling a 400-litre tractor tank went from paying £260 to paying £480–£520 per fill. A farm that fills that tractor twice a week — a modest operation — went from spending roughly £27,000 per year on tractor fuel to spending £50,000+.
Step 3: The Fertilizer Problem
Fertilizer prices have moved even faster than fuel — and the mechanism is direct.
The dominant synthetic fertilizers in modern agriculture are nitrogen-based compounds: urea, ammonium nitrate, and ammonia. These are manufactured through the Haber-Bosch process, which combines atmospheric nitrogen with hydrogen under high pressure and temperature. The hydrogen comes from natural gas — specifically, natural gas is "reformed" (reacted with steam) to produce hydrogen, which then combines with nitrogen.
Natural gas is approximately 70–80% of the cost of producing ammonia-based fertilizer. When the natural gas price spikes — as it does when oil and gas prices spike together — fertilizer production costs spike almost immediately. Unlike road fuel, fertilizer has no tax structure to buffer the percentage increase. The price manufacturers charge reflects their production costs plus margin. When their input costs double, the price at the farm gate roughly doubles.
Robin Aird, who manages a large arable farm in Tetbury, Gloucestershire, told BBC News: "The price of fertiliser has doubled overnight." Spring planting is beginning — the period when fertilizer application is highest. Farms that didn't pre-purchase fertilizer contracts before the war at old prices are now buying at new prices, for their most critical input at their most critical time of year.
James Cox, of Hazlecote Farm in Tetbury, identified the core commercial problem precisely: "Farmers as a whole don't dictate the price. It's not like manufacturing which can charge more. The market hasn't changed dramatically at all for wheat and barley, so we're still being paid similar prices to what we were offered a month ago, but production costs have significantly increased."
This is the agricultural price squeeze in one sentence. Input costs are set by global commodity markets (oil, gas, fertilizer). Output prices are also set by global commodity markets (wheat, barley, milk). Individual farmers control neither. When inputs spike faster than outputs, margins compress — or go negative.
Historical Precedent: 1973 and 2022
This is not the first time an oil shock has moved through agricultural input costs to food prices. The transmission mechanism is well-documented across two prior major episodes.
1973 oil embargo: OPEC's embargo against countries supporting Israel in the Yom Kippur War cut global oil supply by approximately 7–8% and quadrupled the price of crude. Fertilizer prices, which had been rising pre-embargo, spiked by 100–200% in 1973–1974. Global food prices rose 50% in 1973 and continued rising through 1974–1975. The FAO Food Price Index (retroactively calculated) shows this as the largest single peacetime food price shock in the post-WWII era until 2022.
2022 Ukraine war: Russia's invasion of Ukraine disrupted not only Ukrainian grain exports (Ukraine produces approximately 10% of global wheat and 15% of global corn) but also Russian natural gas exports — Russia supplies approximately 40% of Europe's natural gas, used heavily in fertilizer production. European fertilizer manufacturers curtailed or halted production as gas prices spiked. Global fertilizer prices rose 80–200% from 2021 to 2022 peaks. Global food prices hit a record high in March 2022 (FAO Food Price Index). The UN estimated the shock pushed approximately 40 million additional people into acute food insecurity globally.
The 2026 Iran war shock has a different geographic and commodity footprint from either 1973 or 2022, but the transmission mechanism is structurally identical: energy input cost spike → fertilizer cost spike → farm operational cost spike → margin compression → eventual food price increase at retail.
How Long Until It Reaches the Supermarket?
The timeline from energy price shock to retail food price increase typically runs in three phases:
Immediate (days to weeks): Farm operational costs rise. Farmers with contracts or storage may be partially insulated initially, but spot market buyers feel it immediately. Livestock farmers — who cannot delay feeding their animals — are hit first. That's why dairy farmer Mike Catley's 1,000-litre ration limit is a front-page story this week, not in six months.
Short-term (weeks to months): Processing and distribution costs rise, because food processors, packers, and logistics companies all use fuel. Transport costs for perishables (refrigerated trucking) are especially sensitive to diesel prices. Wholesale food prices begin to rise as contracts are renegotiated.
Medium-term (months to a year+): Retail food prices rise. The grocery sector typically absorbs cost increases temporarily before passing them through — partially due to contracts with suppliers, partially due to competitive pressure. But sustained input cost increases eventually show up on shelves. The 2022 Ukraine shock took approximately 4–8 months to fully transmit to UK supermarket prices; the UK's Office for National Statistics recorded food price inflation peaking at 19.2% year-on-year in March 2023.
The key variable is duration. A two-week oil spike that resolves when diplomacy succeeds will produce a short-term farm cost squeeze that doesn't reach supermarket shelves in a meaningful way. A sustained three-to-six month disruption — which is what a prolonged Hormuz restriction would represent — follows the historical transmission timeline to full retail price impact.
The UK Is Especially Exposed
The Wiltshire farmers in this story are a specific case, but the UK's agricultural exposure to oil price shocks is structurally significant for several reasons:
- Fertilizer dependency: UK arable farming is heavily reliant on synthetic nitrogen fertilizers. CF Fertilisers, one of the UK's two remaining domestic fertilizer producers, temporarily shuttered in 2021–2022 due to gas price spikes.
- Red diesel tax structure: As described above, the low-tax structure of agricultural diesel amplifies percentage price increases.
- Import exposure: The UK imports approximately 46% of its food (Defra, 2022 figures), meaning domestic food prices are also subject to global commodity price movements and shipping cost increases — not just domestic farm costs.
- Post-Brexit supply chains: Trade friction with the EU has reduced the speed with which UK food supplies can flex toward cheaper import sources.
The US faces a structurally different situation — it is a major net food and energy exporter — but US farmers are not insulated from fertilizer price increases, which are set globally. American corn and soybean producers, who use among the highest rates of nitrogen fertilizer in the world, will face the same input cost pressure as their UK counterparts if the energy shock is sustained.
The Bottom Line
Tom Collins' tractor costs twice as much to fill as it did last week. That is not a metaphor or a projection. It is a specific fact from a specific farm in Wiltshire, England, reported this morning.
The chain from that tractor to your supermarket runs through oil prices, natural gas prices, fertilizer manufacturing, farm operations, food processing, and retail contracts. Each link adds delay. The full effect on consumer food prices, if the energy shock is sustained, is still months away.
But the shock has already hit the farm. The question now is how long it lasts.
Trump's Hormuz deadline expires at 6:44 PM CDT today. Whether that deadline is enforced, extended, or quietly abandoned will determine whether the energy shock deepens or eases — and whether Catley's 1,000-litre ration limit becomes a footnote or the first paragraph of a longer story.