U.S. President Donald Trump announced that Israel and Iran had agreed to a ceasefire about a week ago, but tensions in the region remain high. Although international oil prices haven’t surged as feared, global fertilizer prices have seen “sharp volatility” over the past two weeks. On June 28, the Financial Times quoted an executive from one of the world’s largest fertilizer companies warning that escalating tensions in the Middle East could squeeze global fertilizer and energy supply chains, potentially triggering a new wave of food price shocks.
Fertilizer Production Under Pressure
The global fertilizer market has been “extremely volatile” over the past two weeks. Since Israel launched a surprise strike on Iran’s nuclear facilities in the early hours of June 13, Middle East urea export FOB futures prices have jumped from under $400 per ton to $435 per ton by June 27—approaching a 52-week high. “This shows how interconnected everything is,” reported the Financial Times. The recent shutdown of Israeli gas fields has disrupted Egypt’s fertilizer production, and regional tensions are quickly rippling through the supply chain.
According to the Financial Times, industry analysts warn that more than one-fifth of global urea production capacity has been shut down due to conflict and supply disruptions. Data compiled by market intelligence firm CZ Insights on June 23 shows that Iran’s urea and ammonia plants have been offline since June 14. For safety reasons, all previously produced ammonia in storage tanks was incinerated.
Although Israel did not directly target Iran’s urea and ammonia facilities, two Iranian natural gas plants supplying domestic factories were struck on June 14, severely disrupting operations. Meanwhile, all nitrogen production plants in Egypt have also shut down due to halted natural gas imports from Israel. Reports indicate these plants will not restart until Israeli gas supplies resume.
The UK-based Commodity Research Unit (CRU) has warned that the Israel-Iran conflict caused “severe disruption” to the nitrogen fertilizer market within days of the incident and poses an “ongoing threat” to phosphate, potash, and sulfur supplies in the region.
The Middle East plays a critical role in global urea, ammonia, and nitrogen production. According to CRU, nearly one-third of global urea exports, 44% of sulfur exports, and about one-fifth of ammonia exports either originate from or pass through countries on the western side of the Strait of Hormuz. This production capacity is directly tied to global fertilizer output—and, by extension, to global food security.
A Growing Threat to Farmers Worldwide
The Strait of Hormuz is a key maritime chokepoint in global supply chains. While its significance for oil and energy is well-known, it also plays a vital role in food production and trade. Last week, the American Farm Bureau Federation issued a briefing warning that, although some agricultural commodities pass through the Strait, its broader impact lies in its influence on global fuel and fertilizer prices—affecting both production costs and export markets.
In 2024, Qatar, Saudi Arabia, and Iran ranked as the world’s third, fourth, and fifth largest nitrogen fertilizer exporters, collectively accounting for about 25% of global nitrogen exports. Including Egypt and Bahrain, the region supplies over one-third of total global nitrogen fertilizer trade. Iran’s fertilizer is mainly shipped to Turkey and Brazil. If fertilizer flows are disrupted, crop producers downstream could face significantly higher input costs.
Take the U.S. as an example: in 2024, about 25% of the country’s fertilizer consumption came from imports—specifically 97% of its potash, 18% of its nitrogen, and 13% of its phosphate. These trade links expose U.S. agriculture to regional instability, threatening both input availability and cost. So far, the tension between Israel and Iran has not yet spilled over into global food markets. Retailers are rolling out summer restocking plans, and seasonal demand typically lowers fertilizer prices. However, geopolitical uncertainty could disrupt this window of opportunity—raising costs just as producers try to lock in prices.
“Fuel, Fertilizer, and Freight: A Global Pricing Lever”
S&P Global warned last week that the Middle East is highly dependent on food imports, and any potential shipping disruption in the Strait of Hormuz could severely impact regional food security.
Data shows that in the past year, agricultural imports into the Gulf accounted for about 8% of all global seaborne agri-trade. The region is the world’s largest importer of wheat and rice, and the second-largest importer of corn. Rising tensions have pushed Gulf shipping insurance premiums sharply higher—prompting concern among Brazilian corn and soybean exporters, as well as Indian rice suppliers.
Iran is a major importer of Brazilian corn, receiving about 12% of Brazil’s total corn exports over the past five years. With the export season approaching, Brazilian farmers are increasingly worried that the Israel-Iran conflict could disrupt shipments to Iran. Early last week, India’s All India Rice Exporters Association revealed that nearly 100,000 tons of premium basmati rice bound for Iran were stuck at port due to shipping and insurance issues. India typically exports around 1 million tons of premium rice to Iran annually.
In its briefing, the American Farm Bureau Federation noted that, for growers, the Strait of Hormuz is less a physical connection and more a global pricing lever for fuel, fertilizer, and freight. While the chances of a major blockade at the Strait currently appear low, farmers still face knock-on effects from ongoing conflict: rising energy prices, unstable fertilizer markets, and spiking transport insurance costs. “Even distant tensions can hit close to home for farmers.”
Though Iran has previously threatened to close the Strait of Hormuz, it has never followed through. Market analysts say the likelihood of a blockade remains low, due to political and economic constraints. However, Svein Tore Holsether, CEO of Norwegian fertilizer giant Yara International, said the company is “closely monitoring” risks around the Strait. With 40% of global urea and 20% of liquefied natural gas flowing through the waterway, Holsether warned that any disruption could trigger a cascading impact on global food production.
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