Hormuz Blockade Ignites Global Fertiliser and Food Emergency
The world is acutely aware of the Strait of Hormuz's critical role in energy flows, but a new alarm is sounding over its equally vital function in the global fertiliser market. As conflict escalates, this maritime choke point, which handles a third of all raw materials for fertiliser trade, faces a near-total shipping blockade. David Miliband, head of the International Rescue Committee, has labelled the situation a "food security timebomb," warning that the window to avert a massive global hunger crisis is rapidly closing.
Fertiliser Production and Trade in Peril
The Gulf region is not only a key transit route but also home to some of the world's largest fertiliser production sites. In 2024, approximately 16 million tonnes of fertilisers were shipped by sea from this area, according to the UN Conference on Trade and Development (Unctad). Iran ranks as the fourth-largest global exporter of urea, the most widely used nitrogen fertiliser, after Russia, Egypt, and Saudi Arabia. Additionally, the Middle East supplies about 45% of the global sulphur trade, a crucial raw material for fertiliser manufacturing.
Since Iran began threatening maritime attacks, only a minimal number of vessels carrying essential ingredients like ammonia, nitrogen, and sulphur are navigating the strait. The Qatar Fertiliser Company (QAFCO), which accounts for 14% of global urea exports, has been offline for nearly a month after Qatar shut its gas plants following Iranian strikes. Doha lacks alternative export routes for urea, relying solely on the Strait of Hormuz, while also depending on the channel for food imports for itself and the neighbouring United Arab Emirates.
Rising Prices and Global Impact
Roughly half of global food production depends on synthetic nitrogen fertiliser. Without it, crop yields would plummet, driving up prices of staples such as bread, rice, potatoes, and pasta, and increasing costs for animal feed. The UN's Food and Agriculture Organization reports that farmers are experiencing a "double shock" from surging fertiliser and fuel prices, with fears that a prolonged strait closure could severely limit global supplies.
Prices have already surged since the conflict began, evoking memories of the 2022 crisis following Russia's invasion of Ukraine and the 2008 global fertiliser spike triggered by high oil prices. Egyptian urea prices, a key benchmark, have jumped over 60%, reaching $780 per tonne from about $484 in late February, as tracked by the CRU Group consultancy. While fertiliser costs for types like diammonium phosphate (DAP), urea, and potash have not yet hit 2022 peaks, analysts caution that prices remain under significant pressure.
Market Paralysis and Supply Disruptions
Chris Lawson, vice-president of market intelligence at CRU, stated that the fertiliser market is in paralysis, awaiting the conflict's end. He noted that supply disruptions have been severe, with buyers scrambling for product, though the situation could worsen. Some purchasers are opting to wait, hoping for price drops once normal trade resumes. However, global fertiliser plants risk maxing out storage and curtailing production if they cannot transport goods or receive raw materials.
Efforts to mitigate economic fallout, such as US moves to loosen sanctions on Belarusian potash producers and suspend sanctions on Russian oil, are unlikely to boost global fertiliser supplies. Russia continues exporting to non-Western countries but has limited spare capacity to meet increased demand.
Regional Vulnerabilities and Agricultural Cycles
The impact of fertiliser price hikes varies by nation, depending on reliance on Gulf imports and agricultural timing. While many European and North American farmers secured fertiliser for spring planting, large importers like Australia face pressure as most shipments arrive between April and June. India, the world's second-largest fertiliser user after China, is particularly vulnerable as its sowing season for major crops like rice and wheat approaches. India depends on imports of raw materials like liquefied natural gas and finished fertiliser products, with government subsidies potentially insufficient to prevent supply disruptions that could reduce food production and raise prices.
Neighbouring countries such as Sri Lanka, Pakistan, and Bangladesh, along with African nations including Malawi, Tanzania, Uganda, Kenya, and Sudan, are heavily reliant on Gulf fertiliser imports. The world's least developed economies have minimal capacity to absorb price shocks, risking strain on household budgets and public finances from increased costs for fertiliser, fuel, and food.
Long-Term Food Security Concerns
Although global food prices have not yet spiked, as the Middle East is not a major wheat exporter like Russia and Ukraine, the long-term effects could be severe if trade route disruptions persist for months. The destabilising conflict threatens to push the total number of people facing acute hunger to record levels this year, according to the UN World Food Programme. As the WTO highlights, fertilisers are the top concern today, underscoring the urgent need for resolution to prevent a full-blown global hunger crisis.
