In 1997, when the strongest El Niño of the 20th century struck Southeast Asia, Vietnam lost millions of tons of rice due to prolonged drought in the Mekong Delta. That same year, the Asian financial crisis wiped out nearly a quarter of Thailand's and Indonesia's GDP within months. These two shocks occurred simultaneously — but they were independent of each other. The global energy market continued to operate normally. Fertilizer still reached farmers. The global food supply chain remained intact.
Nearly three decades later, the picture has changed completely — and become far more dangerous.
According to The Guardian, United Nations experts are warning of a "compound shock effect" stemming from two simultaneous sources: economic consequences from the U.S. and Israel conflict with Iran, combined with "Godzilla"-strength El Niño taking shape over the Pacific. What makes this situation different from 1997 is the interconnection: these two shocks are not independent — they amplify each other through a specific, clear, and extremely dangerous mechanism for Southeast Asia.
The Strait of Hormuz: Asia's strangled lifeline
When the Strait of Hormuz is blocked or shipping activity narrows, Southeast Asia feels it immediately — not because the region is at war, but because this is the world's most essential shipping route for oil and fertilizer. According to The Guardian, after the U.S. and Israel launched military operations targeting Iran, Southeast Asian governments have had to find ways to reduce domestic fuel consumption: the Philippines had civil servants work four days a week, Vietnam called on businesses to have employees work from home, and Thailand required offices to set air conditioning to a minimum of 27 degrees Celsius.
These measures may sound minor, but they reflect a deeper structural reality: Southeast Asia relies heavily on the Hormuz shipping lane not only to import energy, but also to import fertilizer — something the region's export-oriented agriculture cannot do without. According to The Guardian, agriculture accounts for nearly 9% of Southeast Asia's global agricultural export value — a figure large enough that any disruption in the input supply chain would have far-reaching consequences for global food markets.
As of late last week, the situation remained precarious: Iran signaled readiness to re-block the strait following Israeli attacks on Lebanon, while considering imposing new maritime toll systems. According to earlier reports from Saigon Sentinel, Iran accused the U.S. of betraying diplomacy by maintaining a naval blockade even as negotiations were ongoing — and Iran's military claimed it had shot down a U.S. drone in Iranian waters. This strategic ambiguity — negotiating while escalating — is what Southeast Asia fears most, as it prolongs the instability that trade-dependent economies cannot plan around long-term.
El Niño the "Godzilla": when weather is more than just weather
If the Hormuz strait is a shock from human action, then El Niño is a shock from nature — and this time, scientists rate its scale as particularly severe. According to Yahoo News citing the U.S. National Oceanic and Atmospheric Administration (NOAA), El Niño has officially begun and has a 63% chance of becoming a "very — meaning equatorial Pacific surface temperatures will rise by 2 degrees Celsius or more for an extended period. This level has occurred only a few times since 1950 and ranks among historical records.
More concerning is the underlying context: subsurface water in the Pacific is already about 6 degrees Celsius warmer than average in some regions, according to the United Nations World Meteorological Organization as cited by Yahoo News. This is a harbinger of strong surface warming to come. Combined with global temperature baselines already pushed higher by human-caused climate change, 2027 could become the hottest year on record in modern climate history.
For Southeast Asia specifically, strong El Niño means prolonged drought in major rice-growing regions — Vietnam's Mekong Delta, Thailand's Chao Phraya Delta, the Philippines' Luzon region. This is not a hypothetical scenario: every time strong El Niño has appeared in history — 1982 to 1983, 1997 to 1998, 2015 to 2016 — the region's rice yields declined noticeably and global rice prices spiked accordingly.
The amplification mechanism: when two shocks converge into a vortex
This is the crucial point analysts must emphasize: the danger lies not in the isolated existence of each shock, but in how they amplify each other through a specific mechanism — fertilizer.
El Niño causes drought, reducing crop yields. To counter this, farmers need to increase fertilizer use — especially nitrogen and potassium fertilizers — to compensate for heat-stressed soil. But precisely at that moment, the Hormuz strait — the main shipping route for fertilizer from the Middle East and Russia to Asia — is disrupted. The result is: fertilizer demand increases while supply decreases, driving fertilizer prices up at exactly the moment farmers need it most. Smaller harvests, higher production costs, less food — and global prices rise accordingly. According to MSN citing a recent analysis, prices of essential items like bread and pasta will be difficult to reduce due to the combined impact of the U.S.-Iran conflict and El Niño.
This is precisely the vortex the United Nations is warning about. The International Food Policy Research Institute (IFPRI) also confirms that millions of tons of global food risk being damaged by this double instability — from Hormuz and El Niño — that is being created.
Prices will hit the poor and emerging middle class first
In any food crisis, the most vulnerable group is not the richest or the absolute poorest — but the emerging urban middle class in Southeast Asia, people who have begun to escape subsistence economy but lack sufficient financial cushion to withstand prolonged inflation.
In Vietnam, this class is concentrated in Ho Chi Minh City, Hanoi, and rapidly developing satellite cities. They buy processed food, depend on gasoline for transportation, and spend a larger proportion of income on food compared to families in developed countries. When gas prices and rice prices rise simultaneously, they are squeezed from both sides with no easy escape.
This directly affects the Vietnamese community in America in a way often overlooked in macroeconomic analysis: remittances. Each year, overseas Vietnamese — with the community in America comprising the majority — send billions of dollars home to support families. When inflation in Vietnam rises due to surging energy and food prices, pressure to send money home increases as well — precisely when many Vietnamese-American families are also feeling the squeeze from rising cost of living in America. According to the U.S. Energy Information Administration, average national gasoline prices for the week ending June 22, 2026 reached 3.91 USD per gallon — a level high enough for working-class communities in areas like Houston, Little Saigon, or the San Francisco Bay Area to clearly feel the impact on monthly budgets.
For families with relatives working in agriculture in the Mekong Delta or Central Highlands, concerns are even more concrete: a poor harvest combined with high input prices could erase an entire year's savings — pushing the family back into economic vulnerability that took many years to escape.
Historical precedent and what's different this time
From 2007 to 2008, the world experienced a serious food crisis: rice prices tripled within less than a year, triggering riots in more than 30 countries. The causes then were a combination of drought in some wheat-producing regions, high oil prices pushing transportation costs up, and U.S. biofuel corn subsidy policies. But at that time, there was no blockade at the Strait of Hormuz. The fertilizer supply chain still functioned. That was bad enough.
This time, structural factors are stacking up in ways never before seen. El Niño risks causing drought precisely during the main planting season. Hormuz is being threatened precisely when fertilizer demand will be highest. And global temperature baselines are already about 0.5 degrees Celsius higher than in 1997 — meaning every extreme weather phenomenon unfolds on a warmer baseline with less buffer space for agricultural systems.
Southeast Asian governments have expressed hope that an Iran peace deal will restore shipping freedom through the strait. But according to The Guardian, that optimism is becoming fragile as Iran continues signaling potential re-blockade. And even if Hormuz fully reopens, El Niño is not waiting for any diplomatic agreement.
What the Vietnamese American community should monitor
This analysis does not end at the macro level. For the Vietnamese American community, particularly those with family in agriculture or small business in Vietnam, there are specific indicators worth monitoring closely in the coming months:
- Urea fertilizer prices in the Asian market — this is the earliest indicator of agricultural production costs in Vietnam.
- Water levels at dams on the Mekong River — El Niño reduces water flow, affecting both hydroelectric power and irrigation water for the delta.
- Developments in U.S.-Iran negotiations — follow through multiple sources, not just official statements, because as Saigon Sentinel noted earlier, Washington and Tehran are sending contradictory signals about the possibility of reaching an agreement.
Looking back at history, Vietnamese diaspora communities have weathered major food and energy shocks before — both at home and in their adopted countries. But what distinguishes the current situation is the speed of shock convergence and the interdependent nature of these shocks. This is not a time to wait and see. This is a time to understand the mechanism, monitor the indicators, and prepare for an extended period of instability — at least until early 2027, when El Niño is forecast to remain active.
Read the original reports at the source links below.
Bảo Nguyễn
Bảo Nguyễn founded Saigon Sentinel to give the Vietnamese diaspora truly independent, in-depth community coverage at a time when misinformation moves faster than fact-checks and the language barrier makes verification harder than it should be. He sets the editorial standards and quality controls that govern the reporting, chooses the subjects, writes and edits each article, reads it against its sources before publication, audits published output, and handles corrections.