Iran Conflict Shuts Strait of Hormuz, Sends Fertiliser Prices Soaring as Food Shortage Warnings Mount
Military strikes in the Persian Gulf have effectively closed a waterway handling one-third of global fertiliser trade, triggering price spikes and warnings of crop shortfalls during critical Northern Hemisphere planting season.
Coordinated U.S.-Israeli strikes on Iran that began 28 February have disrupted shipping through the Strait of Hormuz, triggering an immediate surge in global fertiliser prices just as farmers in the Northern Hemisphere prepare for spring planting. Urea prices in New Orleans jumped from $457 per ton on Friday to approximately $550 per ton by Monday, according to AgWeb, while Kpler reports that 33% of the world’s fertiliser trade—including 3 to 3.9 million metric tons per month—passes through the 21-mile-wide strait.
Chokepoint Economics
The Strait of Hormuz sits at the centre of global fertiliser Supply Chains. According to Farm Progress, nearly 45% of globally traded urea originates from Persian Gulf facilities, while StoneX Group notes that three of the world’s ten largest ammonia exporters and one in five top phosphate suppliers rely on the waterway. Iran controls 10% to 12% of global urea trade, while Qatar accounts for 11% of urea exports.
The conflict has already halted production. Iranian fertiliser producers have stopped urea and ammonia output following strikes on gas infrastructure, according to Kpler. Egyptian urea plants remain offline after Israel ceased pipeline gas exports, while Qatar shut down LNG production at the world’s largest export facility following an Iranian drone attack. Natural gas is the primary feedstock for nitrogen-based fertilisers, meaning production disruptions compound supply constraints.
Insurance markets have amplified the shock. Even if cargo continues to move physically, freight insurance costs could become economically unviable, according to Scotiabank analysis cited by FreshPlaza. Major carriers including Maersk have begun rerouting traffic via the Cape of Good Hope, adding weeks to delivery schedules.
Timing and Transmission
The disruption could not have come at a worse moment for agricultural markets. Spring nitrogen application season is underway across the U.S. Corn Belt, with March and April representing the largest months for urea imports, according to The Western Producer. A vessel loading in the Persian Gulf today requires 30 days to reach U.S. shores, then another three to four weeks for inland distribution, meaning supply ordered now might not reach farmers until May.
“The timing of the conflict literally could not be worse for the industry. There is never a good time for war, but this couldn’t be much worse.”
— Josh Linville, Vice President for Fertilizers, StoneX Group
The broader fertiliser market was already under strain before the conflict began. Prices had risen 15% for nitrogen and potash and nearly 19% for phosphates between April and September 2025, according to American Farm Bureau Federation. China exported just 5 million tons of phosphate in 2025, down from a normal 8 to 10 million tons, and has announced it will not export phosphate until August 2026. Russian nitrogen facility damage from drone strikes had already tightened sentiment.
Regional Exposure
The supply shock will not be distributed evenly. India and Brazil—both major fertiliser importers—face acute vulnerability. The Telegraph notes that India imports substantial nitrogen volumes to maintain food security, while Brazil relies heavily on imported inputs for export crops. Latin America and Europe source significant urea from the Middle East, according to Kpler, while phosphate exports from Saudi Arabia to the U.S. have increased recently.
Unlike oil markets, fertiliser operates without large strategic reserves. Inventories are commercial, seasonal, and thin precisely when planting decisions must be made, as The Telegraph emphasises. A shipment delayed in energy markets represents a cost; a shipment delayed in fertiliser markets can become a yield loss.
Fertiliser production is energy-intensive, with natural gas accounting for an estimated 60-80% of nitrogen fertiliser production costs. The Persian Gulf’s role as both a major natural gas producer and fertiliser manufacturer creates a structural vulnerability: when conflict disrupts the region, it simultaneously cuts production feedstock, manufacturing capacity, and export routes.
Food Price Transmission
The conflict threatens to accelerate food Inflation through multiple channels. Elevated natural gas prices will add pressure to fertiliser costs given the Gulf’s pivotal role in nitrogen-based production, raising the risk of global food price instability, according to Janes. Yara International, among the world’s largest fertiliser producers, stated that disruptions of this scale will affect both fertiliser and food prices, though it is too early to assess magnitude or duration.
Fertiliser stocks have rallied sharply on the news. Shares of CF Industries Holdings, the world’s largest ammonia producer, climbed to their highest level since late 2022, according to UkrAgroConsult. Yara International shares reached a three-year high before paring gains.
Some U.S. farmers may shift acreage from corn to soybeans if nitrogen supplies do not arrive in time, potentially altering the crop mix for the 2026 harvest. Roughly 93 million acres of corn are expected to be planted in 2026, with fertiliser representing up to 40% of some crop production costs, according to U.S. government data cited by Farms.com.
| Nutrient | Gulf Share of Global Trade | Key Exporters Affected |
|---|---|---|
| Urea (nitrogen) | 33-45% | Iran, Qatar, Saudi Arabia |
| Ammonia | 30% of top 10 exporters | Qatar, Saudi Arabia, UAE |
| Phosphate | 20% of top suppliers | Saudi Arabia |
| Sulphur | 44% (if Hormuz closes) | Regional producers |
What to Watch
Duration of military operations will determine whether this becomes a temporary price spike or a sustained supply crisis. U.S. President Donald Trump has stated that military operations are likely to last at least one month, according to The Western Producer—long enough to miss critical application windows. Insurance market behaviour offers an early indicator: if underwriters do not resume coverage at viable rates within two weeks, alternative sourcing from North Africa and Southeast Asia will become necessary but insufficient to replace Gulf volumes.
Natural gas price trajectories in Europe and Asia will signal whether production costs are rising systemically. Brent crude jumped 13% on 2 March, while European natural gas prices rose 24%, according to Janes. An OPEC+ announcement on 1 March that eight countries would increase production failed to calm markets given limited capacity to offset transit-related disruption.
Chinese export policy remains the wild card. If Beijing accelerates phosphate and nitrogen export approvals ahead of its August timeline, global markets may find marginal relief. If not, the combination of Chinese export restrictions, Middle East supply disruption, and peak seasonal demand will test whether alternative suppliers in Canada, Morocco, and Russia can absorb the shortfall—while navigating their own sanctions regimes and logistical constraints.