The Real Threat from a Strait of Hormuz Closure: A Global Food Crisis
As Iran moves to restrict or effectively close the Strait of Hormuz in the latest escalation of regional conflict, markets have reacted with predictable concern over oil and gas flows. The prospect of higher crude prices and subsequent inflationary pressures has dominated headlines. While this concern is justified, it captures only part of a much larger and more dangerous story.
Beyond Energy: The Fertiliser Shock
A sustained disruption of traffic through the Strait of Hormuz would not merely constitute an energy crisis. It would represent a severe fertiliser shock, where prices skyrocket and supply plummets, creating a direct and immediate threat to global food security. Modern agriculture depends not only on sunlight and soil but critically on natural gas.
The legacy of German chemists Fritz Haber and Carl Bosch, who developed nitrogen fixation in the early 20th century, remains a cornerstone of modern civilization. Their process transforms methane into ammonia, which is then converted into nitrogen fertilisers like urea—the most widely used nitrogen fertiliser globally. These fertilisers enable the crop yields that sustain today's global population. Without them, harvests of wheat, maize, and rice would collapse dramatically.
The Critical Chokepoint for Fertiliser Trade
Approximately one-third of globally traded urea passes through the Strait of Hormuz. The Persian Gulf region sits at the heart of this system for two structural reasons. First, it provides access to some of the world's cheapest natural gas, essential for ammonia production. Second, decades of vast capital investments have built substantial ammonia and urea capacity in Qatar, Saudi Arabia, and the United Arab Emirates, primarily for export markets.
A significant share of globally traded nitrogen fertiliser—along with the liquefied natural gas (LNG) that powers fertiliser plants elsewhere—must travel through this narrow maritime chokepoint. A closure would therefore threaten not only oil and gas exports but the physical flow of nitrogen-based fertilisers and the resources needed to produce them.
Immediate and Long-Term Impacts
The immediate effect would be delays or complete stoppages of ammonia, urea, and LNG shipments, with costs becoming prohibitively expensive due to higher freight and insurance premiums. However, the deeper impact would unfold over subsequent months at farms worldwide.
In the northern hemisphere, fertiliser purchases accelerate before planting seasons. A delay of weeks can be disruptive; a disruption of months can be catastrophic. If shipments fail to arrive on time, farmers face impossible choices: paying sharply higher prices, reducing application rates, or altering crop mixes. Even modest reductions in nitrogen use can produce disproportionately large declines in yield, potentially translating into millions of tonnes of lost crops.
The consequences would ripple through global supply chains into feed markets, livestock production, biofuels, and ultimately retail food prices. The system's fragility extends beyond nitrogen. Sulphur, an essential plant nutrient largely derived as a byproduct of oil and gas processing, would also see output decline if energy shipments through Hormuz are disrupted.
Global Dependencies and Vulnerabilities
Self-sufficiency in fertilisers is rarer than it appears. India relies heavily on LNG imports from the Persian Gulf to run its domestic urea plants. Brazil depends substantially on imported nitrogen and phosphate fertilisers to sustain soybean and maize production. Even the United States, one of the world's largest fertiliser producers, imports meaningful volumes of ammonia and urea to meet regional demand and stabilise prices.
In sub-Saharan Africa, where fertiliser use is already low, further price increases would likely reduce application even more, cutting yields and exacerbating food insecurity. The production of synthetic nitrogen is tightly coupled to energy markets because it is manufactured continuously from natural gas. A disruption in gas supply or ammonia trade immediately constrains global nitrogen availability. Estimates suggest that without synthetic nitrogen, the world could feed only a fraction of its current population.
No Quick Fixes
Changing where fertiliser is produced cannot happen overnight. Financing and constructing new ammonia plants takes years. A double-digit contraction in exports from a key region cannot be swiftly offset. In the interim, prices would rise, trade flows would re-route, and planting decisions would be made under extreme uncertainty.
Food price inflation, historically correlated with social unrest, could intensify dramatically. Central banks, focused primarily on fuel-driven inflation, could underestimate the contribution of fertiliser scarcity to overall price levels. Crucially, fertiliser shocks do not register with the same immediacy as oil shocks. Petrol prices change overnight; crop yields reveal themselves months later. Yet the latter may prove far more destabilising.
A 21st Century Lesson
If the 20th century taught policymakers to fear oil embargoes, the 21st should teach them to fear a fertiliser shock. Energy markets can absorb shocks through reserves and substitution. But the global food system has far thinner buffers. A prolonged disruption at Hormuz would not simply reprice crude; it would test the resilience of the industrial nitrogen cycle on which modern civilisation depends.
Oil powers cars. Nitrogen powers crops. If the Strait of Hormuz closes, the most consequential price may not be Brent crude but the cost of feeding the world.
