“Everyone is looking for other markets as it’s becoming increasingly impossible to buy stocks from Ukraine or Russia,” a Middle Eastern commodities banker said, citing disruption to shipping, escalating sanctions, and rising insurance premiums.
Wheat importers face a threat to delivering politically sensitive bread supplies across the Middle East and North Africa (MENA) after Russia’s invasion of Ukraine closed off access to the lower-priced Black Sea grain they depend on.
The ensuing conflict has halted shipping from Ukraine’s ports. In contrast, financial sanctions have put payments for purchases of Russian wheat in doubt, traders and bankers say, adding another to the risk for governments in the MENA region already struggling with import costs, economic crises, or conflict.
“Everyone is looking for other markets as it’s becoming increasingly impossible to buy stocks from Ukraine or Russia,” a Middle Eastern commodities banker said, citing disruption to shipping, escalating sanctions, and rising insurance premiums.
“The market is not expecting Ukrainian and Russian exports to resume until the fighting ends,” one trader said.
Soaring global prices and possible export restrictions make switching to alternative origins costly. At the same time, options for expanding local production in the MENA region are limited by water scarcity and rising input costs. While Gulf countries are protected by fiscal surpluses, other MENA countries, including Egypt and Lebanon, “remain some of the most vulnerable globally, given the dependence on wheat imports and high household spending on food,” Monica Malik, chief economist at Abu Dhabi Commercial Bank, said.
Egypt, often the world’s largest importer, bought 80% of its wheat from Russia and Ukraine last year, traders said.
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