Hormuz Conflict Chokes Fertilizer and Energy Flows, Raising Global Crop Cost Risks

The near‑shutdown of the Strait of Hormuz since late February has rapidly evolved from an energy crisis into a critical squeeze on global fertilizer and fuel supplies, just as Northern Hemisphere farmers head into spring planting. With vessel traffic through the chokepoint reportedly down by around 90%, fertilizer prices are surging and logistics pathways are being redrawn under intense time pressure for the 2026 crop cycle.

Iran’s closure and tight control of the strait in response to the ongoing war has stranded key exports of oil, liquefied natural gas (LNG), sulfur and nitrogen fertilizers from Gulf producers. Analysts now warn that if disruptions persist into late April, the combination of higher input costs and delayed deliveries could translate into lower application rates, altered planting decisions, and elevated food price inflation through 2026–27.

Headline

Hormuz Conflict Chokes Fertilizer and Energy Flows, Raising Global Crop Cost Risks

Introduction

The Iran war, triggered by joint U.S.–Israeli strikes on 28 February 2026, has led Tehran to heavily restrict commercial shipping through the Strait of Hormuz, a corridor that normally carries about a fifth of global oil and a major share of LNG and fertilizer exports. Shipping data indicate that daily vessel transits have collapsed, with only a fraction of normal tanker and container traffic now passing the strait.

The immediate focus has been on energy, but the same chokepoint handles close to one‑third of seaborne fertilizer trade and a large share of sulfur exports, a key input for phosphate fertilizers. As gas‑based nitrogen production in Qatar and other Gulf states is curtailed and shipments are delayed, fertilizer supply chains for grain and oilseed producers across Asia, Europe, and Africa are facing tightness at the crucial pre‑planting window.

🌍 Immediate Market Impact

The closure has delivered a dual shock to agricultural input markets: higher energy costs and curtailed fertilizer availability. Brent crude has surged above $120 per barrel, while European benchmark Dutch TTF gas prices have nearly doubled from pre‑war levels, lifting production costs for ammonia and urea in consuming regions that depend on gas‑intensive fertilizer output.

According to international estimates, up to 40% of global nitrogen fertilizer exports and roughly 45% of sulfur shipments are affected by the near‑halt of tanker traffic through Hormuz. Spot urea prices are already up around 50% and ammonia about 20% since the conflict began, with some analysts projecting that nitrogen prices could roughly double from 2024 averages if the disruption persists.

📦 Supply Chain Disruptions

Near‑standstill tanker movements have left Gulf‑origin fertilizer, sulfur, and LNG cargoes either delayed in port or seeking complex rerouting solutions. Data from shipping trackers suggest that since mid‑March only a few dozen vessels have managed to transit Hormuz, mostly linked to Iranian crude, underlining the scale of the bottleneck for other commercial flows.

For agricultural markets, the bottleneck coincides with the final procurement window for spring fertilizer deliveries in major corn, wheat, and rice regions. More than a quarter of global nitrogen trade and about 20% of LNG normally move through Hormuz, while many Asian buyers rely on Gulf producers for over one‑third of urea and more than half of sulfur and ammonia imports. Any cargoes that miss late‑March and April delivery slots may arrive too late to influence this year’s yield potential.

India has so far cushioned domestic impact by ramping up gas allocations for its fertilizer sector and maintaining high operating rates at local plants, but it still depends on imported ammonia, phosphoric acid, rock phosphate and muriate of potash. Sustained Gulf disruption could tighten these flows and force higher subsidy outlays or retail price adjustments later in the year.

📊 Commodities Potentially Affected

• Urea and Ammonia: Directly exposed to Gulf gas and export capacity; prices have already spiked 20–50% amid blocked shipments through Hormuz.
• Phosphate Fertilizers (DAP/MAP): Limited sulfur and ammonia availability from the Gulf tighten feedstock supply, raising production costs and spot prices globally.
• Potash (MOP): Not shipped mainly via Hormuz but faces secondary price support as buyers substitute and overall fertilizer affordability deteriorates.
• Corn: The most nitrogen‑intensive major crop; high urea prices may prompt acreage shifts toward less fertilizer‑intensive crops and reduce application rates, pressuring future yield potential.
• Wheat and Rice: Also vulnerable to lower nitrogen application, especially in import‑dependent emerging markets where farmers are more price‑constrained.
• Vegetable Oils and Oilseeds: Higher diesel and logistics costs, plus competition for limited fertilizer, may raise production costs for soy, palm, and rapeseed.

🌎 Regional Trade Implications

Asian markets are among the most exposed, with data showing that they typically receive around 35% of urea, 53% of sulfur, and 64% of ammonia exports from the Middle East. Importers in South and East Asia face the prospect of higher CIF prices, tighter spot availability, and greater reliance on longer‑haul supplies from North Africa, Russia, and North America.

India’s near‑term fertilizer production has remained stable due to increased domestic gas provisioning, but the country still needs significant imports of finished products and raw materials over the rest of 2026. In a tight global market, Indian buyers may have to bid more aggressively in tenders, potentially diverting cargoes from smaller importers in Africa and South Asia and raising the risk of localized shortages.

On the energy side, Europe is bearing the brunt of LNG scarcity, with TTF prices jumping to around €55–60/MWh and gas storage falling to multi‑year lows. This undermines the economics of European nitrogen plants, limiting their ability to offset lost Gulf output and further tightening global fertilizer balances into the 2026–27 season.

🧭 Market Outlook

Over the next 30–90 days, fertilizer and energy markets are likely to remain highly volatile, tracking both the pace of any negotiated transit exemptions and military developments around Hormuz. Iran has agreed in principle to facilitate humanitarian and agricultural shipments, and has already allowed limited aid and selected national cargoes to pass, but these carve‑outs are narrow and subject to rapid change.

For the 2026 crop now being planted, much of the damage in terms of cost and risk premia may already be locked in, especially for nitrogen‑hungry crops like corn. Price moves in urea, ammonia, DAP, and fuel over April will be critical indicators of whether supply chains are adapting or whether the market is shifting into a more prolonged phase of fertilizer scarcity and elevated food inflation risks.

CMB Market Insight

The Hormuz crisis illustrates how a regional armed conflict can simultaneously stress multiple nodes of the agricultural input chain—fuel, gas, sulfur, and nitrogen—at the exact moment when farmers worldwide are making time‑sensitive planting and application decisions. Even if partial transit resumes, the lag in production restarts, rerouting, and freight availability implies that logistics normalisation will trail any diplomatic breakthrough by weeks, not days.

For commodity traders, importers, and food industry buyers, priority in the coming quarter will be to secure diversified fertilizer and fuel supply, adjust hedging to elevated volatility, and closely monitor tender outcomes in key importing regions such as India and Southeast Asia. Structural shifts in trade flows—toward alternative nitrogen and phosphate origins and away from Gulf concentration—are likely to accelerate, reshaping fertilizer benchmarks and basis relationships well into the 2027 harvest cycle.