Falling oil prices will ease supply-chain stress in the US
Falling oil prices are easing supply-chain stress and inflation, but challenges remain in agriculture. Discover more insights in our latest report.
Falling oil prices are set to alleviate supply-chain stress, particularly as shipping costs begin to decline. While a return to pre-war conditions will take time, current supply-chain issues are less severe than in 2021-2022.
In May, supply-chain stress reached its highest level since 2022, primarily driven by surging global freight rates—air freight rates increased by 17% and ocean freight rates by nearly 40% compared to the pre-war average. The recent tentative reopening of the Strait of Hormuz has contributed to this situation, although traffic remains below 20% of pre-war levels.
The decline in energy prices is expected to ease broader inflationary pressures, with fertilizer prices also showing signs of stabilisation. However, challenges remain, particularly regarding the potential impact of reduced agricultural yields due to earlier price spikes in fertiliser.
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