Middle East Conflict: Impacts on Global Coffee, Cocoa, and Tea Markets

The escalation in Middle East hostilities, following US strikes on Iran on February 28, has jolted global markets. Crude oil futures increased by more than 8% to multi-month highs as the Strait of Hormuz remains a pivotal chokepoint for over 20% of global oil. Coffee, cocoa, and tea supply chains face steeper inputs, with market players monitoring transportation and insurance costs.  

Tea 

Tea carries the most immediate geopolitical risk, with Kenya and India highly exposed to Iranian and Gulf demand. In 2024, Kenya shipped about 13 million kilograms of tea to Iran worth roughly KSh 4.26 billion (around $33.2 million). While Pakistan remains Kenya’s largest buyer, Iran and Gulf states provide vital secondary outlets that help absorb supply in strong production years. 

Following the strikes, airlines and shippers have rerouted or suspended services, while marine insurers pulled war-risk cover, lifting freight and insurance costs. For Kenyan exporters operating on thin margins, this erodes competitiveness, especially for premium teas vulnerable to delays. Higher fuel costs add strain, as refined imports from Gulf producers transit conflict-sensitive corridors. 

India’s Assam orthodox segment is even more exposed: roughly half its output goes to Iran, with about 10.69 million kilograms exported last year, mostly via Dubai, which was hit by Iranian missile strikes over the weekend. Airspace closures and communications disruptions raise shipment delays, payment risks and possible contract cancellations, potentially leaving more orthodox tea in domestic channels and pressuring prices if alternative buyers fail to absorb surplus volumes, according to market sources. 

Coffee 

Coffee constitutes roughly 30 to 35% of Ethiopia’s export earnings and is its primary traded commodity. The conflict’s proximity and regional instability have prompted cautious sourcing; for example, Pact Coffee halted Ethiopian purchases last year. Rising energy costs inflate transportation and logistics expenses for Ethiopian coffee exporters, squeezing margins and complicating delivery through Middle Eastern routes. Market speculation may support near-term prices, according to sources, which had previously been following a downward trend, as markets react to rising oil, freight, insurance and other logistical costs. However, harvest conditions and global demand remain the principal drivers. 

Cocoa 

Cocoa is less directly affected but not immune. Higher oil prices raise shipping, fertilizer, and processing costs, offering limited price support. However, cocoa prices remain tied to West African production fundamentals, making any oil-related upside short-lived and vulnerable to weakening if risk appetite declines and funds shift away from softs.