Renewed Iran Gulf Strikes Revive Fertilizer Supply Shock and Global Food Price Risks

Fresh U.S. airstrikes on Iran and retaliatory attacks on Gulf states have reignited fears of a renewed shutdown of the Strait of Hormuz, with immediate implications for liquefied natural gas (LNG), fertilizer trade and global food prices. Fertilizer exports from the Gulf were already sharply curtailed by the war; a breakdown of the fragile ceasefire now raises the risk of a second wave of supply shocks during key planting windows.

Commodity markets are reacting to a scenario in which about a fifth of global LNG and up to a third of seaborne fertilizer trade again face elevated disruption risk, alongside higher oil prices. Tighter supplies of nitrogen products such as ammonia and urea could quickly translate into higher production costs and yield risks for major crop exporters and import-dependent regions.

Introduction

In recent days, the United States has launched new airstrikes on targets in Iran, while Tehran has fired missiles at Bahrain, Kuwait and Qatar, undermining a mid-June framework intended to de-escalate the conflict in the Persian Gulf. The renewed hostilities follow a series of attacks on commercial vessels in and around the Strait of Hormuz, a critical corridor for global oil, LNG and fertilizer shipments.

The International Energy Agency (IEA) notes that the initial war-related closure of Hormuz in late February severely disrupted LNG flows that previously accounted for almost 20% of global supply, with fertilizer exports from the Gulf “largely halted” since the start of the conflict. With the ceasefire now in jeopardy, agricultural markets are reassessing the likelihood of prolonged constraints on key inputs just as farmers in the Northern Hemisphere plan autumn fieldwork.

Immediate Market Impact

The renewed tension has already pushed oil prices to their highest levels in weeks, according to recent reports, reinforcing cost pressures across energy-intensive fertilizer production and global food logistics. LNG price spreads between U.S. and import markets widened sharply after the initial closure; any delay in reopening Hormuz or fresh attacks on gas infrastructure would keep global gas benchmarks elevated.

Higher gas prices directly raise marginal production costs for nitrogen fertilizers such as ammonia and urea. Prior to the war, 20–30% of global fertilizer exports and roughly half of sulphur exports, used in phosphate fertilizers, transited Hormuz. With Gulf fertilizer exports already constrained, additional shipping risks could tighten spot availability, increase price volatility and widen regional differentials, especially for import-dependent buyers in Asia, Latin America and Africa.

Supply Chain Disruptions

The effective closure of Hormuz earlier this year sharply reduced vessel traffic, with tankers and bulk carriers rerouted or idled as war risk surged. The UN has warned that continued strikes and threats to navigation could deepen the disruption, as around 20–30% of fertilizer exports and half of sulphur exports rely on this corridor.

Key Gulf producers of nitrogen and phosphate fertilizers, including Iran, Qatar, Saudi Arabia and the UAE, have cut or suspended operations due to damage and security concerns. Export terminals face congestion, higher insurance premiums and periodic closures, while receiving ports in South Asia, East Africa and Brazil have had to manage irregular arrivals and delayed cargoes. The latest escalation raises the probability of renewed port backlogs, missed laycans and tighter freight availability on alternative routes.

Commodities Potentially Affected

• Urea and ammonia: Nitrogen fertilizers depend heavily on natural gas feedstock; Gulf export capacity has been sharply curtailed, and a prolonged security crisis could keep prices elevated and spot tonnage scarce.
• Phosphate fertilizers (DAP/MAP): Around 20% of global phosphate trade originates in countries affected by the conflict, with sulphur flows through Hormuz also critical; any renewed disruption tightens supply and raises production costs.
• Potash: While less directly exposed to Gulf logistics, potash demand and pricing may adjust as farmers rebalance nutrient applications in response to high nitrogen and phosphate costs.
• Major cereals (wheat, maize, rice): Higher fertilizer and fuel prices increase production costs and may prompt reduced application rates, lowering yields and supporting cereal price floors in import-dependent regions.
• Oilseeds and sugar: Exporters such as Brazil and India face higher input and freight costs, which can filter through to soybean, corn, sugar and vegetable oil export prices.

Regional Trade Implications

Import-dependent agricultural economies such as India, Brazil and many African states are among the most exposed to another fertilizer shock. CGIAR analysis highlights that the Hormuz closure pushed global crude up 58% and fertilizers up 66% between February and April, significantly raising cultivation costs and food price pressures in India. Should the conflict re-intensify through the second half of 2026, these economies may need to diversify sourcing further, draw down strategic stocks or increase subsidy outlays.

Latin American grain and oilseed producers reliant on imported fertilizers could face renewed margin compression and difficult decisions on application rates. In contrast, nitrogen and phosphate exporters outside the Gulf—such as North African and some former Soviet producers—may see improved pricing power and higher utilisation as trade flows pivot away from Hormuz. However, limited spare capacity and logistics constraints will cap their ability to fully offset lost Gulf volumes.

Market Outlook

In the short term, fertilizer and energy markets are likely to price in a renewed geopolitical risk premium, with heightened volatility around any news on attacks, ceasefire talks or shipping incidents in Hormuz. Traders will closely monitor LNG loadings, freight rates, insurance costs and any signs of damage to fertilizer plants or export terminals in the Gulf.

If hostilities can be contained and a maritime deconfliction mechanism restored, some LNG and fertilizer flows may gradually resume, easing price pressure into late 2026. However, repeated disruptions risk entrenching a higher-cost environment for nitrogen and phosphate fertilizer, accelerating efforts by large importing countries to diversify supply chains, expand domestic production where feasible and adjust cropping and input strategies.

CMB Market Insight

The renewed escalation in the Iran conflict underscores that Hormuz is now a structural chokepoint not only for energy but for global food production. Fertilizer and sulphur trade flows exposed to the corridor remain a critical vulnerability for cereal and oilseed supply balances worldwide. For commodity traders, importers and food industry buyers, managing this risk will require closer attention to fertilizer procurement timing, supplier diversification and hedging of both input and output price exposures.

Even if physical fertilizer prices retreat from their recent peaks, the embedded geopolitical premium and possibility of further shipping incidents argue for continued caution. Strategic positioning in fertilizer, grain and oilseed markets will increasingly hinge on assessments of Gulf security dynamics alongside traditional fundamentals such as crop conditions and demand trends.