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Agriculture · Fertilizers · Food Prices · Hormuz
The Strait of Hormuz closure on March 1, 2026, triggered sharp fluctuations in global agriculture markets by blocking energy exports and essential crop nutrient supplies, impacting Gulf producers responsible for 34% of global urea trade and 23% of global ammonia trade, according to the International Fertilizer Association.
This disruption places heavy pressure on the global fertilizer industry, particularly for urea and phosphates, with prices already rising due to blocked exports from the Gulf region. The Middle East, including Iran, Qatar, Saudi Arabia, United Arab Emirates, and Bahrain, supplies a significant share of global fertilizer inputs, with nearly half of global urea trade (18.5 million tons in 2024) originating from the region and passing through the Strait.
Urea production relies heavily on natural gas, which constitutes 80% to 90% of ammonia production costs, making the Strait critical for nitrogen fertilizer economics. Furthermore, the waterway carries nearly half of global seaborne sulfur, a key raw material for phosphate fertilizers.
Egypt, a major urea producer for the European Union, faces particular risks as its fertilizer plants depend on imported natural gas, with Israel among its main suppliers. A widening conflict or failure of alternative routes will cause Egypt's production to decline, further tightening global fertilizer supplies.
The supply shock, combined with rising energy and freight costs, will increase pressure on global food supply chains and contribute to higher food prices worldwide.
The world’s fifth-largest container line by capacity expects a major hit to earnings as disrupted trade flows and costs add to declining freight rates and slowing market growth.
