The ongoing Iran conflict has severely disrupted shipping through the Strait of Hormuz, a critical waterway for global trade, particularly for fertilizers. According to the United Nations, approximately one-third of the global seaborne fertilizer trade passes through this route, which has been effectively halted since the war began, with several ships reportedly hit by projectiles in or near the waterway [1]. Since the U.S. and Israel launched strikes on Iran on February 28, fertilizer prices have soared, with analysts noting that the cost of FOB granular urea in Egypt—a key indicator for nitrogen fertilizers—has jumped to around $700 per metric ton, up from $400 to $490 before the conflict [1].
Oxford Economics' Alpine Macro reported in a Monday note that urea and ammonia prices have surged by approximately 50% and 20%, respectively, since the onset of the war. Other fertilizers, such as potash and sulfur, have also experienced price increases [1]. Chris Lawson, VP of market intelligence and prices at CRU, highlighted that with the Strait of Hormuz essentially cut off, about 30% of exportable suppliers—including Saudi Arabia, Qatar, Bahrain, and Iran—are not available to the market. Iran is a significant producer and exporter of nitrogen-based fertilizers, accounting for 30% of global urea trade from Hormuz-constrained countries [1].
The disruption is expected to have far-reaching consequences for farmers worldwide, particularly as they enter crucial planting and harvesting seasons. Dawid Heyl, co-portfolio manager for the Global Natural Resources strategy at Ninety One, emphasized that nitrogen fertilizers like urea are at the forefront of the crisis because they are required annually, unlike other fertilizer groups such as potash and phosphates [1]. While inventories may temporarily cushion the impact, crop yields and production losses are anticipated later in the year if supply constraints persist [1].
The sharp rise in fertilizer prices is fueling concerns about food security and inflation, as farmers may struggle to access essential nutrients for their crops. The market reaction has been significant, with analysts warning of looming risks to global food production and supply chains [1].
CONCLUSION
The Strait of Hormuz blockage has triggered a dramatic spike in fertilizer prices, raising alarms about food security and inflation. With a substantial portion of global supply now inaccessible, analysts expect continued market volatility and potential crop yield declines later in the year if the disruption persists. The situation underscores the critical importance of the Middle East in global fertilizer trade and the vulnerability of agricultural supply chains to geopolitical events.