The ongoing Middle East conflict, following the US and Israeli military action in Iran, has increasingly entangled global tea markets in trade disruptions, extending beyond earlier concerns about cost inputs. According to industry sources, traders in East Africa and South Asia are struggling with logistical and cost challenges as once-reliable demand from Iran and neighboring Gulf markets is effectively frozen or rerouted amid escalating regional risk and logistical uncertainty.
In Kenya, the ramifications have been particularly stark. Iran has historically been a significant buyer, purchasing roughly 12-13 million kg of Kenyan tea in 2024, according to data from the Tea Board of Kenya. Industry sources report that hostilities have disrupted air and sea linkages through Gulf hubs, leaving shipments bound for Tehran in limbo and contributing to an accumulation of tea inventory at Mombasa and other export points. Buyers in Iran and Gulf states are hesitant to confirm orders or settle payments given heightened risk premiums, dampening auction participation and weighing on prices for grades that once commanded strong bids in Middle Eastern markets.
The impact is similarly evident in Indian orthodox tea markets. According to industry sources close to auction houses, Iran has long been a major destination for Indian orthodox tea, particularly from Assam. Since late February, consignments for Tehran have increasingly stalled at Kolkata and other ports as trade communications falter and payment risk rises. The buildup of unsold stock has fed into domestic and secondary auctions, where price competition has intensified, and premiums for orthodox lots have softened amid absent Gulf buyers. The lack of Iranian offtake has also affected forward contracting, with traders reluctant to enter new deals in regions where delivery risk remains elevated.
Beyond shipments and inventory backlogs, broader regional logistics disruptions have compounded demand dislocation. Gulf airspace closures and maritime route diversions have led buyers in the UAE, Iraq, and neighboring states — previously re-export hubs or complementary markets — to adopt more cautious purchasing patterns. Industry traders note that shortened settlement terms, heightened risk-adjusted pricing, and reluctance to commit to forward contracts have weakened bidding behavior in major tea auctions, particularly for orthodox and premium CTC grades.
This dynamic is underscored by local Iranian news sources, which show that Iran depends heavily on imported tea to meet domestic demand, as production in northern provinces such as Gilan and Mazandaran is not sufficient to cover consumption. As a result, the disruption to Iranian imports has effectively removed a key source of global demand, leaving excess tea in exporting countries. Exporters are now being forced to redirect these volumes to alternative markets in North Africa, Central Asia, and parts of Europe, typically at lower prices than those previously achieved in Gulf markets.
The combined effect of demand withdrawal and logistical fragmentation is visible in price and auction dynamics. Whereas earlier in the conflict price pressure was largely anticipatory, recent weeks have seen actual declines in auction and secondary market price realizations for grades historically reliant on uninterrupted Gulf and Iranian offtake. Traders describe a market where rerouting to alternative destinations is possible but the absence of Iran, once a dependable buyer, has forced reassessment of inventory strategies and pricing expectations.
In cocoa and coffee markets, the war’s impact has been evident in broader risk sentiment and macro volatility but not in similarly direct trade disruptions. Cocoa prices have experienced notable swings in fundamental demand and financing conditions in West Africa, while coffee pricing has reflected global macroeconomic shifts and demand expectations; however, authoritative reporting has not documented major, war-induced supply blockages or price dislocations in coffee or cocoa explicitly linked to the Middle East conflict itself thus far.
Written by Sammy Rolls
