The Strait of Hormuz has been held hostage by war for more than a month. With no end in sight, the world is realising just how much it depends on a waterway that is, at its narrowest, about 33 kilometres.
Roughly 20 to 25 per cent of global seaborne oil trade, around 20 million barrels a day, passes through the Strait, beside a fifth of the world's liquefied natural gas. It is the only sea route connecting the Arabian Gulf to the open ocean, making it a vital artery for energy exports from Iran, Iraq, Kuwait, Qatar, Saudi Arabia and the UAE.
About 80 per cent of the oil that crosses the strait is destined for Asia, with Japan, India and South Korea among the most vulnerable to disruption. For diesel, nine in every 10 barrels that leave the Gulf do so through the strait.
But the consequences of any disruption would reach far beyond the petrol pump.
The strait is equally vital to global food security, serving as the primary export route for the fertilisers that sustain crop production worldwide. Half of all globally traded sulphur passes through it, along with 30 per cent of urea and 25 per cent of ammonia, chemicals without which modern agriculture cannot function. Some analysts estimate that as much as one third of the global fertiliser trade could be affected by a prolonged closure.
Qatar Fertiliser Company, Saudi Basic Industries Corporation, better known as Sabic, and the UAE's Fertiglobe are among the Gulf producers whose exports underpin supply chains stretching from South-east Asia to South America.
"Sulphur is a key feedstock in the production of phosphate fertilisers," Mr Daguerre told The National. "So, a closure of the Strait could also impact phosphate fertiliser production globally."
A significant share of Gulf fertiliser shipments are bound for Brazil. The country is almost entirely dependent on imported fertilisers to sustain its vast soy and corn harvests, crops that in turn feed livestock across Europe, Asia and beyond. A prolonged closure of the Strait, analysts warn, would ripple from the Gulf to the world's dinner plate within months.
The pressure is already being felt. Oil is trading above $100 per barrel, up from around $73 the day before the conflict began. The surge will feed directly into transport costs for farmers, pushing up the price of producing staples 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 published last week.
For Gulf producers, the stakes are mutual. Iran, despite being a major producer of nitrogenous fertilisers, exports very little, and its own oil revenues depend on the same waterway it has periodically threatened to close. That contradiction has, until now, acted as a brake on the most extreme scenarios. Whether it continues to do so remains the question markets are watching most closely.
Addtional reporting: Fareed Rahman and Kamal Tabikha
