Impact of the Iran War on Global Fertilizer Prices and Supply Chains

Since the U.S. and Israel initiated military strikes on Iran on February 28, 2026, the price of fertilizers, particularly nitrogen-based products, has experienced significant increases. Analysts report that the cost of granular urea, a key nitrogen fertilizer, has surged to approximately $700 per metric ton, up from $400 to $490 prior to the conflict. Oxford Economics noted that urea and ammonia prices have risen by around 50% and 20%, respectively, since the onset of hostilities. The Middle East, a major exporter of urea and nitrogen fertilizers, has seen disruptions in supply chains, particularly due to the closure of the Strait of Hormuz, which has restricted about 30% of global urea trade.

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Dawid Heyl, a co-portfolio manager at Ninety One, emphasized the critical role of nitrogen fertilizers, stating, "You can't skip a season of nitrogen." This sentiment is echoed by Sarah Marlow, global head of fertilizer pricing at Argus, who highlighted that the Middle East crisis could have a more profound impact on fertilizer trade than the previous Russia-Ukraine conflict. The region is responsible for nearly 50% of globally traded sulfur and a significant portion of urea and ammonia.

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As farmers in the Northern Hemisphere prepare for planting, the supply constraints are expected to intersect with cyclical demand, potentially impacting agricultural yields. Heyl warned that if agricultural yields were to decline by 5% this year, it could lead to food inflation, particularly affecting emerging markets such as India and several African nations that rely heavily on imported grains. The U.S. is not entirely insulated from these effects, as it also imports nitrogen fertilizers.

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The conflict has led to a de facto closure of the Strait of Hormuz, a vital maritime passage for oil and other commodities. Approximately 30% of global seaborne oil trade and 20% of liquefied natural gas trade have been disrupted. Shipping traffic through the strait has plummeted, with fewer than 100 vessels passing through in the first 20 days of the conflict, a 95% reduction from the daily average of 130 ships. This disruption has caused significant delays and increased costs across various sectors, including automotive, chemicals, and construction materials.

Iran war continues to impact automotive supply chain

In response to the crisis, Indian shipping regulators have implemented measures to monitor shipping practices and prevent opportunistic pricing by carriers. The Directorate General of Shipping in India has established a dedicated mechanism for stakeholders to report issues related to freight pricing and shipment delays. This initiative aims to maintain transparency and fairness in commercial practices amid the ongoing disruptions.

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While the fertilizer market faces immediate challenges, there are concerns about the long-term implications of the conflict on global supply chains. The International Energy Agency has warned that the ongoing war could lead to the largest supply disruption in the history of the global oil market, with potential knock-on effects on energy prices and food costs worldwide. The situation remains fluid, and the extent of the conflict's impact on global markets will depend on the duration of the strait's closure and the effectiveness of international responses.

Iran war continues to impact automotive supply chain

• "You can't skip a season of nitrogen." — Dawid Heyl, Co-Portfolio Manager, Ninety One

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• "Almost 50% of all globally traded sulfur comes from that region." — Sarah Marlow, Global Head of Fertilizer Pricing, Argus

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• "If agricultural yields were [hypothetically] impacted by 5% this year, it would certainly cause food inflation." — Dawid Heyl, Co-Portfolio Manager, Ninety One

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The ongoing conflict in the Middle East continues to pose significant challenges to global fertilizer supply and agricultural stability, with far-reaching implications for food security and economic stability worldwide.

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