Introduction
Geopolitical shocks are usually priced first in the markets most directly exposed to the threatened supply chain. In the case of Iran-related tensions around the Strait of Hormuz, the most immediate pricing channel is crude oil. The Strait of Hormuz is one of the world's most important oil chokepoints, with EIA estimating that oil flows through the strait averaged around 20 million barrels per day in 2024, equivalent to roughly 20% of global petroleum liquids consumption [7]. Yet the market response does not necessarily stop at oil. Energy prices affect transportation costs, storage, processing margins and agricultural inputs. Gasoline prices affect the relative attractiveness of ethanol and other biofuels. Natural gas is linked to ammonia and nitrogen fertilizer production. Soybean oil is a more direct input into biodiesel and renewable diesel than soybeans themselves. For this reason, an energy shock can become a cross-commodity shock.
This paper uses the 2026 Iran-Hormuz shock as a case study to analyse how geopolitical risk may transmit from energy futures to agricultural and biofuel-linked futures. The purpose is not to forecast commodity prices, nor to claim that a single geopolitical event explains all movements in corn and soybean markets. Instead, the objective is to study whether the observed pattern of prices, volatility and abnormal returns is consistent with an indirect transmission mechanism from energy markets to agricultural futures.
