Prices for wheat shipments scheduled for delivery next October rose 25% from levels before the grain supply bottleneck and the disruption of traffic through the Black Sea, raising import costs and increasing pressure on food security and public finances in Arab countries that rely heavily on imports.
The increase comes as the Russia-Ukraine war and the Israeli-US war on Iran continue, while transport flows and supply chains remain disrupted. The Black Sea is a vital route for global crop shipments, with Russia and Ukraine together accounting for more than a quarter of global wheat trade.
Varying Arab import needs
Arab countries rely heavily on imports to meet their food needs, with wheat among their main imports. The region imports nearly 56% of the calories it consumes from cereals, most of them from wheat, while some Arab countries rely on imported wheat for 100% of their needs.
Egypt is among the Arab countries most exposed to pressure because of its reliance on wheat imports from the Black Sea region. The Food and Agriculture Organization expects Egypt to import 13.5 million metric tons, about 8% above the usual average, despite an expected record domestic harvest of 10 million metric tons in the 2026/2027 season.
The organization estimates Algeria's imported wheat needs at about 8.5 million metric tons, slightly below the usual average, and Morocco's at about 5 million metric tons, nearly 15% below the average of the past five years. Saudi Arabia's needs stand at about 4 million metric tons, roughly 3% higher, while Iraq is expected to import about 2.2 million metric tons in the 2026/2027 season, nearly 10% below the usual average.
Varying impact on inflation and budgets
Economist Salim Besbes said higher wheat prices could raise inflation by between 1% and 2% in several Arab economies, depending on subsidy structures and government policies. The pass-through to consumers remains relatively limited in countries that subsidize bread and essential goods, such as Egypt, Tunisia, Algeria and Jordan, because public finances absorb a large share of the shock.
In countries that do not provide broad subsidies, global prices feed through more quickly to food prices and the consumer price index. The effects intensify when high import dependence coincides with limited fiscal capacity to subsidize food and low reserves or domestic production.
Academic and economist Ahmed Zekrallah said higher prices raise import costs and put pressure on flour, bread and food product prices, while also increasing the subsidy bill and potentially widening the public budget deficit. He added that bread is a staple in low-income countries, which could lead households to cut spending on education, healthcare and transport in favor of food rather than reduce wheat consumption.
Market volatility and containment tools
Zekrallah said part of the increase was linked to geopolitical tensions and disruptions to trade through the Black Sea, but noted that wheat markets had become more sensitive to any disruption to production, transport or exports. Continued conflicts and disruption to shipping routes could keep prices high and volatile, while improved supplies or reduced geopolitical risks could help bring them down.
Besbes said the most likely scenario was for prices to remain relatively high, with periodic volatility linked to crops, weather conditions and financial markets. Continued supply disruptions or higher energy and fertilizer prices caused by escalating tensions in energy- and wheat-producing areas of the Middle East and Europe could trigger a new wave of food inflationary pressure across the Arab region.
Proposed tools to mitigate the impact of higher prices
Use strategic wheat reserves to address short-term global volatility.
Increase allocations for wheat and bread subsidies to limit the pass-through of price increases to domestic prices.
Cut or suspend tariffs and taxes on imports of grains and essential food products.
Diversify supply sources to reduce the risks of relying on a limited number of suppliers or geographic regions.
Target the most vulnerable groups with direct cash transfers when they are more efficient than broad-based subsidies.
Support domestic production and reduce reliance on imports over the long term.
Governments' ability to contain the fallout depends on balancing the protection of purchasing power with the sustainability of public finances, particularly in countries that rely heavily on subsidies for essential goods. The shock is also magnified when higher wheat prices coincide with rising energy and transport costs and declines in local currencies.
