From the Middle East to Alberta: How Oil Tensions Are Raising Farm Costs

Even without supply shortages, risk premiums on diesel and fertilizer are cutting into farm profitability ahead of spring.

A global oil chokepoint disruption is rippling into Alberta farms, raising input costs and adding uncertainty just ahead of seeding.

Rising geopolitical tensions in the Middle East — particularly around the Strait of Hormuz — are once again sending shockwaves through global energy markets. While the disruption is thousands of kilometres away, Alberta farmers and seed growers are already feeling the effects through higher diesel and fertilizer costs, tightening margins ahead of the 2026 growing season.

The Strait of Hormuz is one of the world’s most critical oil chokepoints, with roughly a fifth of global petroleum liquids passing through it each day. Any perceived threat to shipping in the region tends to trigger immediate price volatility, as markets price in risk even before physical supply is disrupted.

That’s exactly what Alberta producers saw following the latest escalation.

Nick Sekulic, owner of Prestville Farms in Rycroft, says diesel markets shifted almost overnight.

“Before this conflict in the Middle East and the Strait of Hormuz impact… diesel prices were relatively low and flat,” he says. “We didn’t see the hedging opportunity.”

That changed quickly.

“The Monday after the conflict opened up… I called my agent,” Sekulic says. “He said (pricing) was flat… then three or four days later, you couldn’t get a contract price.”

The rapid shift reflects how energy markets respond not just to supply disruptions, but to uncertainty itself. Even without immediate shortages in North America, prices rose as suppliers added a risk premium tied to potential future disruptions.

“Domestic diesel production is irrelevant,” Sekulic says. “We have decent domestic supply… but they’re just charging a risk premium on the fuel they have now.”