Strait of Hormuz closure triggers global sulfur crunch, forcing fertilizer production cuts across three continents
Gulf refinery byproduct scarcity pushes phosphate producers underwater, threatening food security in 50+ import-dependent nations as prices surge past $1,200 per tonne.
The closure of the Strait of Hormuz has severed access to 70% of global sulfur supplies, forcing Mosaic, CF Industries, and Nutrien to slash phosphate production by up to 50% as input costs double and margins collapse. The Gulf region’s oil refineries generate elemental sulfur as a byproduct of processing sour crude — the raw material for sulfuric acid used in phosphate fertilizer manufacturing. With 50-92% of seaborne sulfur trade normally passing through the Strait, the supply shock has pushed prices from roughly $600 per tonne before the 28 February conflict began to $1,200 per tonne by May 2026.
Phosphate producers pull the lever
Mosaic announced 50% production cuts at its Louisiana and Florida phosphate plants on 11 May, citing unsustainable economics. The company posted a $373 million operating loss in Q1 2026 and withdrew full-year production guidance, according to its SEC filing. CEO Bruce Bodine stated the new price regime has rendered most global capacity unviable.
“At $1,200 per ton sulfur price, as an example, much, if not all, of the producer cost curve is underwater.”
— Bruce Bodine, President & CEO, Mosaic Company
Nutrien reported similar margin compression in its Q1 2026 results filed with the SEC. The company’s phosphate segment saw EBITDA decline due to higher sulfur input costs, with realized prices of $379 per tonne in Q1 and guidance projecting $540 per tonne for Q2 — figures that reflect selling prices rising slower than input costs. CF Industries, the world’s largest nitrogen fertilizer producer, noted in its quarterly filing that 25-30% of global traded ammonia and 35-40% of global traded urea originates in the Middle East, with most volumes now unable to transit the Strait.
The production cuts arrive as diammonium phosphate (DAP) reached $692.50 per metric tonne on 27 March and monoammonium phosphate (MAP) hit $770 per tonne in the US and $990 per tonne in Europe, per commodity data compiled in May. Potash prices surged to $488 per tonne in March 2026, the highest level since February 2023 and up from $358.30 per tonne in January.
Byproduct dependency creates single point of failure
Sulfur’s role in the global commodity stack is structurally vulnerable. bne IntelliNews notes the Gulf region produces 44-70% of global sulfur, with 92% derived from oil and gas refining operations. Roughly 60-70% of that output feeds fertilizer manufacturing. Saudi Arabia, the UAE, Kuwait, and Qatar dominate seaborne trade, and no alternative shipping route exists for volumes normally transiting Hormuz — pipeline capacity to Europe and Asia cannot absorb the shortfall.
The supply architecture means sulfur availability is now directly coupled to Middle Eastern crude refining throughput and geopolitical stability. Robert Friedland, founder of Ivanhoe Mines, told Foreign Policy in April that traders were already struggling to source supplies and predicted sulfuric acid prices would “significantly increase across Africa.” Sulfur is also critical for copper leaching operations in the Democratic Republic of Congo and nickel production in Indonesia, where output cuts have already begun according to Mining.com.
Elemental sulfur is produced almost exclusively as a refinery byproduct when processing ‘sour’ crude oil containing hydrogen sulfide. Middle Eastern refineries process the world’s largest volumes of sour crude, making Gulf producers the dominant global source. Sulfur is converted to sulfuric acid for use in phosphate rock processing — the chemical reaction that produces fertilizers like DAP and MAP. No economically viable synthetic substitute exists at scale.
Import-dependent regions face acute exposure
Sub-Saharan Africa imports approximately 80% of its fertilizer, with 19% sourced from the Middle East between 2020-2022, according to analysis citing African Development Bank data. The region’s agriculture is 70% smallholder-based, with limited capacity to absorb input cost inflation or substitute imported nutrients. The Food and Agriculture Organization estimates a 10% reduction in fertilizer availability could result in 25% lower maize, rice, and wheat yields across the region.
The World Bank projects fertilizer prices will rise 31% in 2026, with urea surging 46% month-on-month between February and March alone. The World Food Programme warned in March that prolonged conflict could push 45 million additional people into acute food insecurity during 2026. South Asia faces parallel pressures — India, Bangladesh, and Pakistan rely heavily on Middle Eastern nitrogen supplies, with no domestic sulfur production to backstop phosphate manufacturing.
- Gulf refineries generate 70% of global elemental sulfur; no substitute supply source exists at comparable scale or cost
- Phosphate fertilizer production economics collapse above $1,000/tonne sulfur input cost
- Sub-Saharan Africa and South Asia lack domestic sulfur/phosphate production and cannot insulate smallholder farmers through subsidies
- Nitrogen fertilizer supply also constrained — Middle East accounts for 25-40% of global ammonia and urea trade
Brent crude rose 55% above pre-conflict levels by end of April, reaching $101.40 on 5 March before moderating slightly, per tracking data. The oil price spike compounds fertilizer inflation — nitrogen production is energy-intensive, and higher natural gas prices feed through to ammonia and urea costs even before Strait closure effects.
What to watch
Mosaic has indicated it will reassess production levels quarterly based on sulfur price movements and phosphate demand. Any diplomatic progress that reopens Hormuz transit would likely see sulfur prices retreat within 30-60 days as inventories normalize, though refinery utilization timelines add lag. Monitor DAP and MAP price indices — if prices hold above $700-750 per tonne through Q3 2026, planting seasons in the Southern Hemisphere (October-December) will face acute supply constraints.
Track African Development Bank and World Bank Food Security bulletins for early indicators of yield impacts. Kenya, Nigeria, and Ethiopia import 90%+ of fertilizer needs and have limited fiscal space for subsidy programs. CF Industries and Yara International earnings calls in July will clarify whether nitrogen producers can maintain output at elevated natural gas prices or if further capacity curtailments are coming. Any expansion of the conflict to include UAE or Saudi refinery infrastructure would eliminate remaining sulfur supply entirely, forcing a shift to food aid rather than fertilizer trade for much of Sub-Saharan Africa.