The unofficial closure of the Strait of Hormuz has not only disrupted the energy sector, it is also having a huge impact on the worldwide supply of fertilisers worldwide.
The Gulf region is a vital supplier of urea and other ingredients in fertiliser production, including nitrogen and sulphur. Liquefied natural gas (LNG), another important energy source, is also a critical feedstock for the production of fertilisers. That source has also been disrupted after QatarEnergy, which provides 20 per cent of the world's supply, declared force majeure last week.
If the Strait of Hormuz blockade continues, a clog in the supply of fertilisers will drive up food production costs and prices, according to analysts.
“We believe that a protracted or prolonged closure of the Strait of Hormuz will have a significant impact on the fertiliser market, especially the nitrogen fertiliser market, which is a lot more reliant on the region,” Guillaume Daguerre, senior director of natural resources and commodities at Fitch Ratings told The National.
About 30 per cent to 35 per cent of global nitrogen fertilisers currently go through the strait, while sulphur constitutes about 40 per cent to 45 per cent of total global exports from the Gulf.
Qatar Fertiliser Company, Saudi Basic Industries Corporation, better known as Sabic, and the UAE’s Fertiglobe are vital companies that play an important role in supplying fertilisers to global markets.
“Sulphur is a key feedstock to the production of phosphate fertilisers. So the closure of the strait could also impact phosphate fertiliser production globally,” Mr Daguerre said.
Surge in fertiliser prices
Urea prices have already been on the rise amid disruption caused by the war, reaching about $591 per tonne currently, up roughly 25 per cent since the war began. Prices of other fertilisers are also increasing amid a shortage in supplies, according to analysts.
“The most important rise has been on urea as it is quite dependent on the region for supplies, but demand has also been quite strong. We've also seen a rise in ammonia price, but not to the same extent, but this could follow at a later stage,” Mr Daguerre added.
Among the markets that are most exposed to fertilisers are India and Brazil. The US is also a big market, but it is relatively insulated, as over half its nitrogen is domestically produced. Brazil imports more than 90 per cent of its urea.
“India’s 66 per cent of imported urea and 50 per cent of its LNG imports (feeding domestic urea plants) come from the Gulf region. Due to this, some Indian fertiliser plants have cut output,” said Jesse Chung, market analyst at FGENexant.
India is heavily dependent on fertilisers for its agricultural production. It is the world’s largest grower and exporter of rice, and the second-largest producer of wheat, cotton and sugar.
Some urea producers in India and Bangladesh have shut down plants or moved up annual maintenance after Qatari supplies of LNG, a vital feedstock, were suspended due to the Iran war, Bloomberg reported on Thursday.
Manufacturers, including top producer Indian Farmers Fertiliser Co-operative, have either halted some of their facilities or started routine upkeep, it added.
Food prices set to rise
Production costs for farmers are expected to rise as prices of fertilisers increase due to shortages in the global market, Mr Daguerre said. This in turn could lead to a jump in food prices.
“It's not just fertiliser, this is fertiliser plus oil, because oil is also an important cost for farmers,” Mr Daguerre said.
Oil prices have been surging since the US and Israel attacked Iran on February 28, with Brent, the benchmark for two thirds of the world's oil, currently trading above $100 per barrel, up from about $73 per barrel a day before the war started.
The rise in oil prices will have a direct impact on transport costs for farmers, leading to higher production costs of agricultural commodities such as rice and wheat. The rise in crude and fertiliser prices will have a direct impact on food prices, Oxford Economics said in a report last week.
It expects aggregate world food prices to increase around 2 per cent this year. In February it forecast a less than 1 per cent increase.
“As a result of higher natural gas prices and the importance of the strait for fertiliser trade, we have raised our fertiliser price forecast by around 20 per cent for the second quarter of 2026,” Oxford Economics said. “Risks are skewed to the upside due to the real risk of disruption to production in the region and trade through the strait.”
Egypt's strategic position
Egypt, which is one of the world's top 10 fertiliser exporters and the largest in Africa by volume, has long relied on the sector as a source of hard currency.
Officials say its position along the Red Sea and the Mediterranean gives it strategic reach that Gulf producers lack, allowing it to keep exports moving and attract trade that would otherwise be routed through the now-disrupted Strait of Hormuz.
Statements from both the Export Council for Fertilisers and the Chamber of Chemical Industries over the past week expressed optimism that Egypt's fertiliser producers could seize additional market share as Gulf plants face higher transport and insurance costs.
They pointed to an annual nitrogen-fertiliser output of roughly seven to eight million tonnes, with nearly half typically exported, and argue that this production base could help fill supply gaps in Europe and Africa.
But industry realities are far less comfortable. Egypt's transition from an exporter to a net importer of gas by 2025, driven by falling domestic output and record power demand, has left fertiliser manufacturers repeatedly short of feedstock.
Also, with Qatar, one of Egypt's vital sources of natural gas, unable to provide supplies at the moment, further doubts have been raised as to whether local supply alone can enable a drive for more exports.
Meanwhile, Abu Qir Fertilisers, Mopco and Kima, once vital fertiliser producers, were forced to halt operations periodically due to extreme heatwaves over the past two years as the government prioritised civilian use.
Gas prices also rose last September as the government lifted subsidies on gas used by the industry. Alongside the price increase, Egypt introduced a new quota scheme that cuts the share of subsidised fertilisers sold to farmers through the Ministry of Agriculture to about a third of total output, freeing more capacity for export sales.
As of 2025, energy accounts for close to 70 per cent of nitrogen-fertiliser production costs, eroding their profit margins. This has cast some doubt on Egypt's ability to truly take advantage of the Hormuz closure.
However, some relief lies in sectors less dependent on gas. Egypt produces roughly five million tonnes of phosphate rock each year and converts about three million tonnes of it into phosphate fertilisers, products that require far less natural gas to manufacture.
