The Coffee Industry’s Petroleum Problem

There’s an oft-cited claim that coffee is the world’s second-most-traded commodity after oil. It is stated as fact in research papers, coffee company blogs, social media posts, and news articles. A representative for Starbucks even repeated it during a 2017 Senate hearing. It’s also not true (a range of commodities, from metals to grains, outstrip coffee), and maybe never was. 

But while the coffee industry might be dwarfed by the petroleum sector—the former had $50 billion in export value in 2024, compared to the latter’s more than $550 billion—the two remain tightly intertwined.

For all that the coffee industry touts its environmental credentials, it still relies heavily on the cheap (read: subsidised) fossil fuels that have driven most modern economic growth. It uses petroleum-derived fertiliser to increase harvest yields. Diesel for generators and processing equipment. Heavy fuel oil to power cargo ships, and gas to run coffee roasters. Plastic for packaging and cups. Electricity, often generated by fossil fuels, to run espresso machines and grinders. 

Although there is inherent hypocrisy in the biggest coffee companies portraying themselves as sustainable while doing little to alter this status quo, it’s true that—given how embedded petroleum is in our world economy and daily lives—making that change is hard, expensive, and incremental.

With the 2026 Iran War, however, there is new impetus to do so. Iran’s closure of the Strait of Hormuz has thrown many of the world’s supply chains into chaos, and coffee has not been immune from the turmoil. While the physical delivery of green coffee has so far been relatively untroubled, the fallout from the disruption to the petroleum and petrochemical sectors will have much wider and more long-lasting ramifications. (Obviously, the implications for food production are much more important and worrisome, but this is a coffee newsletter, so.)

The impacts may not hit right away. But when they do, they will be prolonged and possibly disastrous. Amidst the cascading consequences, the best outcome we can hope for in coffee is that the crisis spurs the industry to accelerate its transition away from petroleum.

Pointless, Stupid, and Illegal

The Hormuz Strait crisis began in late February, when the United States and Israel launched airstrikes against Iran. As well as targeting military sites and assassinating Iranian leadership, the strikes also hit civilian infrastructure such as hospitals and schools, killing thousands. 

Iran retaliated, striking U.S. bases, its Gulf neighbours, and Israel. The conflict also spilled over into Lebanon, as Israel instigated an invasion of southern Lebanon at the end of March. Since March 2, Israel has killed more than 2,000 people in Lebanon and displaced more than a million.

Since the U.S.-Israeli airstrikes began, Iran has effectively shut down the Strait of Hormuz, a narrow waterway between the Persian Gulf and the Gulf of Oman that serves as both a major maritime trade route and a strategic choke point. Under normal circumstances, 25% of the global seaborne oil trade and 20% of the liquid natural gas trade pass through the strait. Predictably, its closure has upended energy markets and sent the price of oil through the roof.

The war itself is pointless, stupid, and illegal. Over the past six weeks, Donald Trump has continued to provoke, bully, and complain that things aren’t going his way (in between declaring victory at several points). On April 7, the U.S. president threatened to destroy “a whole civilization” unless Iran opened the strait, an astonishing, genocidal threat. Numerous “pauses” and ceasefires have been announced over the past few weeks, although fighting continues as of publication.

The direct human toll is of course the most important element of the current crisis. But the wider ramifications of the strait’s closure for the world are also dire—the International Energy Agency called the closure “the largest supply disruption in the history of the global oil market”—and will continue to be so for the long term. A policy brief from Kiel University noted that “energy disruptions cascade through chemicals and fertilizer production into food prices, amplifying losses for the world’s poorest countries”. Alongside other agricultural products, these cascades will also hit coffee. 

In the short term, shipments from Asia and Africa to the Arabian Peninsula—which has a booming coffee scene—will be disrupted, as cargo vessels are forced to reroute. In the medium term, the increase in oil prices will raise costs along the supply chain, says Vidya Mani, associate professor of business administration at the University of Virginia’s Darden School of Business. “The fallout from the rise in oil prices means that the energy required to power each stage in the supply chain is more costly, a direct hit on the bottom line,” she says.

For example, higher diesel prices can impact coffee farmers, especially in more mechanised countries like Brazil. The price of liquid natural gas, which powers many coffee roasters, has also spiked in response to the crisis.

There are less direct impacts as well. Chemical fertilisers and plastic packaging rely on petroleum or natural gas as feedstock, and both have seen prices rise and supply diminish in the aftermath of the Hormuz closure. The coffee industry is reliant on both. “Outside the premium coffee market, much of the industry operates at high volumes and low margins”, Mani says. “There is very little buffer, and it cannot absorb the multiple cost pressures all coming in at the same time”.

Coffee’s Fertiliser Dependency

When researchers investigate coffee’s carbon footprint, they generally find that the majority of emissions are released on the production side of the supply chain. (These life-cycle assessments also let Global North companies shift the blame for coffee’s environmental impact onto farmers.) The bulk of farm-level emissions result from fertiliser: As a 2020 study in Vietnam found, fertiliser use was responsible for more than 83% of coffee production’s carbon emissions.

Coffee production today relies heavily on synthetic fertilisers, particularly nitrogen, which are derived from petroleum. Their use was encouraged by development agencies and financial institutions, beginning in the 1970s, as a way to intensify coffee production and boost farmer incomes. Smallholder farmers, needing to constantly increase yields in order to make ends meet, are often trapped in a cycle of dependency.

These fertilisers help to increase yields in the short term, but their impact on the environment is ruinous. The production of synthetic nitrogen fertiliser uses natural gas as an energy source and a feedstock: In 2018, the synthetic nitrogen fertiliser supply chain was responsible for nearly 11% of all agricultural emissions, and more than 2% of the globe’s greenhouse gas emissions, much of it from the release of the potent greenhouse gas nitrous oxide. Studies have also found that fertilisers are often overapplied, which can cause soil acidification and leach into groundwater.

Where and how coffee is grown makes a big difference to how much fertiliser is used. Countries with more intensified, mechanised farming systems, growing more commodity-grade coffee with less shade, such as Brazil and Vietnam, rely heavily on synthetic fertilisers.

On the other end of the scale, farmers in countries like Timor-Leste use little to no fertiliser. Timor-Leste is often referred to as “organic by default” due to the lack of chemical inputs (although this is due, at least in part, to economic constraints, and coffee farms suffer from low productivity as a result). Smallholder, organic, and agroforestry-based farms have a far smaller impact due to their limited use of chemical inputs.

A not-insignificant portion of the global fertiliser trade moves through the Strait of Hormuz, and its closure has sent prices soaring. The cost of nitrogen-based fertilisers has more than doubled since Iran began blocking the strait, and disruption to supply is expected to continue even after it reopens.

Because Brazilian coffee farmers aren’t typically fertilising their crops at this time of year, the impact of higher prices hasn’t yet become apparent, the agronomist Jonas Ferraresso tells me. However, should the Strait of Hormuz’s closure—or its impacts—continue into June and July, then farmers may begin to feel the pinch. “For now, I do not see anything directly affecting coffee, but it will in the near future if the prices stay high”, he says.

Higher diesel costs are having a much more immediate impact, Ferraresso says, as farmers use it for their equipment but also because higher prices affect the cost of transporting coffee from farms to ports and onwards. In Brazil, the world’s largest coffee producer, diesel oil prices rose between 12–23% in March, depending on the state. 

‘Molecules Simply Aren’t Moving’

Plastic is another omnipresent yet relatively under-discussed petroleum product used by the coffee industry. It serves many purposes, from protecting green beans during transport to packaging roasted coffee and lining takeaway cups.

Like fertiliser, the cost and availability of many plastic products has been directly impacted by the Hormuz closure. According to Matt Slutzker—the principal analyst for PET/RPET at the data analytics and research firm Wood Mackenzie—one big repercussion has been on the supply of raw materials that usually travel through the strait. “In short, molecules simply aren’t moving”, he says.

Asian refineries and manufacturers have already been hit by supply slowdowns and increases in raw material costs. “In Western markets like the U.S., producers have issued price increase announcements and surcharges for polyester and polyolefins, the two largest plastics for commercial packaging”, Slutzker says.

Although not as reliant on plastic as other food and beverage industries, coffee is still mostly stored and served in packaging made from plastic. That’s before taking into account the plastic components used in home coffee brewing equipment. Slutzker says that plastic prices have already jumped in many markets, and that extended high oil prices will also keep plastic costs elevated in the medium to long term. “If oil prices remain where they are, packaging prices will remain elevated and could see an extended [increase] because supply chains will take extra time to normalise”, he says.

GrainPro, which manufactures hermetic bag liners for green coffee and other commodities, has been directly impacted by the disruption. “We are seeing upward pressure on raw material costs due to higher oil prices and supply uncertainty”, Jordan Dey, GrainPro’s CEO, tells me. “Most suppliers have already increased prices, and more is expected”. Dey says that his company has introduced a “temporary surcharge” due to the rising raw material costs, and may need to implement a more permanent price increase should the disruption continue. 

A Better Way

While the coffee industry remains reliant on petroleum and its byproducts, it’s important to stress that it doesn’t have to be this way. We’re not going to suddenly shift to shipping all coffee via sailboat (although it is happening in niche cases), but alternatives to basically everything else do exist. They’re just slightly more expensive, or need investment to scale. Until now it’s been easier not to do that, but the Strait of Hormuz crisis has hastened the need for change.

Take fertiliser. At the very least, we could be using a lot less—coffee trees only take up about a quarter of the fertiliser they are fed, and overuse harms their long-term health and productivity. Organic farming, agroforestry, and regenerative agriculture offer alternative approaches for coffee cultivation. As I wrote previously on the rise of regenerative agriculture in coffee, a great many farmers already utilise these techniques, and have for generations. Scaling such solutions is doable—it just takes investment.

Alternatives to diesel-powered production equipment are additionally increasingly available, although they are often out of the reach of smallholder farmers. Some organisations are trying: The social enterprise green coffee trader Raw Material recently constructed two solar-powered processing hubs in Timor-Leste, while Fairtrade International and other institutions have been piloting similar projects. According to the Mesoamerican Development Institute NGO, solar- and biofuel-powered coffee dryers cut energy use by 80%, lowering the energy cost of the coffee-drying stage by 90%.

Plastic alternatives are also becoming more popular in coffee packing—some researchers are even using waste coffee grounds as the basis for new bioplastics. (While such plant-based plastics have a lower environmental impact, if disposed of incorrectly they still release methane and can leach chemicals, just like regular plastic.) The Hormuz closure has led companies to shift focus towards recycled plastic, Slutzker says, although ramping up production of biodegradable alternatives won’t be a fast process. The crisis “reinforces the urgency of reducing reliance on petroleum-based materials and building more circular systems,” Dey tells me.

For many parts of the coffee supply chain, the impact of the Hormuz closure won’t be felt in the short term. Cost of production increases and supply shocks can take a while to filter through to roasters, cafes, and consumers. But for farmers, for whom fertiliser and fuel already represent an outsized percentage of their cost of production, the consequences can and will come much sooner. Producer groups in Colombia and Costa Rica are already warning of a significant impact on farmers in both countries.

It is of course the biggest companies that should shoulder the burden of the transition away from petroleum and fossil fuels. It is worth noting that the coffee industry has already made some progress in this regard. While I often question their motives, it is genuinely encouraging to see multinationals like JDE Peet’s and Nestlé investing in regenerative agriculture and attempting to reduce their carbon footprints (even if their investment falls far short of what’s required to truly transform the coffee industry).

Still, more is needed. The Strait of Hormuz crisis has unleashed energy shocks that will likely impact the industry for years to come, but that disruption is small in comparison to what the wider climate crisis will bring. It is past time for the coffee industry to kick its petroleum dependence—but it remains to be seen whether the Iran War will be enough to prompt it to take the necessary steps away from fossil fuels.

Header image by Gerhard Crous on Unsplash