Iran war threatens global fertilizer supplies

The escalation of the war in Iran is jeopardizing one of the world’s key fertilizer production and export hubs, increasing the risk of higher farming costs and accelerating global food inflation. The Persian Gulf region hosts some of the largest fertilizer plants globally, while the Strait of Hormuz handles roughly one-third of worldwide fertilizer trade flows.

The conflict comes at a particularly sensitive moment, as farmers across the Northern Hemisphere prepare to apply nutrients to their fields. According to StoneX Group, the timing “could not be much worse” for the industry, which was already facing elevated prices and tight supplies before the latest tensions erupted.

The market impact is already visible. Qatar shut down liquefied natural gas production at the world’s largest export facility following an Iranian drone attack. Natural gas is a critical input for nitrogen-based fertilizers such as urea. Qatar accounts for about 11% of global urea exports, while nearly 45% of worldwide shipments originate from Persian Gulf facilities.

Following the effective closure of the Strait of Hormuz, granular urea prices in Egypt surged by $60 per metric ton. In New Orleans, March urea barge prices jumped by $60 to $80 in a single session, with traders warning that further increases of potentially hundreds of dollars per ton could follow in the coming days.

The fertilizer market was already under pressure due to tight supplies and geopolitical risks, including earlier drone damage to Russian nitrogen facilities. Russia and Qatar remain the two largest urea suppliers to the United States. Although the US imports little fertilizer directly from Iran, substantial volumes from other Middle Eastern producers transit through the Strait of Hormuz.

According to Yara International ASA, the strait represents a “critical chokepoint” for global fertilizer logistics. The company noted that while the scale and duration of potential disruptions remain unclear, such events are likely to affect both fertilizer and food prices worldwide.

Amid the turmoil, fertilizer stocks rallied sharply. Shares of CF Industries Holdings Inc., the world’s largest ammonia producer, climbed to their highest level since late 2022. Analysts caution that even if physical flows continue, soaring freight insurance costs could make shipments economically unviable, adding further strain to global agricultural markets.

Tags: prices, fertilizers, war