The Hormuz Blockade Hits Global Agriculture

Since Iran closed the Strait of Hormuz at the end of February, much of the global fertilizer trade has effectively come to a halt. Qatar, Saudi Arabia and the United Arab Emirates are among the world's leading exporters of urea and ammonia, and roughly one third of all fertilizer shipped globally passes through the strait (Financial Times, 14.03.2026). Currently, an estimated one million tonnes of fertilizer is stranded in the Persian Gulf, either on board vessels or waiting to be loaded, with no possibility of obtaining war-risk insurance or securing military escorts (Kpler, 14.03.2026). For the world's farmers, the timing could hardly be worse. The Northern Hemisphere planting season runs from mid-February to early May, and shipments that fail to arrive in April cannot be replaced in time to save this year's harvest.

Fertilizer is one of the most important inputs in agriculture, accounting for roughly 25 percent of total production costs. Nitrogen fertilizers are particularly critical to the yield of staple crops such as wheat, corn and rice. The Gulf region dominates this market for two structural reasons: access to some of the world's cheapest natural gas, which is the key raw material for producing ammonia and urea, and decades of capital investment that have built enormous export capacity in the region.

The blockade has swiftly removed this capacity from the market. Since the outbreak of the war, the price of urea has risen by more than 40 percent and now exceeds 700 dollars per tonne, compared with under 500 dollars before the strikes (Financial Times, 14.03.2026). Sulfur, a byproduct of oil and gas refining that is essential for the production of phosphate fertilizers, has roughly doubled in price. Of the 2.1 million tonnes of urea usually exported over a two-week period, about half has disappeared from the market since the blockade began (Financial Times, 14.03.2026).

The consequences are now rippling through the entire production chain. Last week, Qatar's large urea plant QAFCO, shut down after adjacent LNG facilities were forced to halt operations. QAFCO has a capacity of 5.6 million tons per year (Financial Times, 14.03.2026). India has ordered its fertilizer plants to reduce gas consumption to 70 percent of normal levels. In Pakistan and Bangladesh, several plants have halted production entirely. China, the world's largest fertilizer producer and one of the few conceivable sources of replacement supply, has responded by tightening export restrictions to prioritize its domestic agricultural sector (Bloomberg, 20.03.2026).

The comparison with Russia's 2022 invasion of Ukraine is a natural, but experts warn that the 2026 situation risks being more serious. The key difference is that Russian fertilizer never disappeared from the global market in 2022; it was rerouted through alternative channels. Today there are far fewer alternative routes for products trapped behind a closed strait.

The price picture illustrates this. In 2022, the price of urea peaked at USD 925 per tonne, reaching that level over the course of several months (Bloomberg, 20.03.2026). Current levels above 700 dollars have been reached in three weeks. Nitrogen fertilizer prices are expected to potentially double if the conflict drags on, while phosphate prices could rise by up to 50 percent (Morningstar, 18.03.2026). The FAO estimates that global fertilizer prices could remain 15 to 20 percent above normal levels throughout the first half of 2026 if the crisis continues (FAO, 16.03.2026).

The effects of the fertilizer crisis vary by crop, and the expected price movements point in partly different directions.

Corn is the crop most sensitive to rising nitrogen fertilizer costs. In the United States, corn is the dominant grain and feed crop, and it requires more applied nitrogen per hectare than most other staple crops. As fertilizer costs rise, some farmers are choosing to reduce application rates or switch to crops that require fewer inputs. This suggests a reduced corn supply at a time when demand from animal feed and ethanol production remains high.

Soybeans are in a naturally advantageous position. Unlike corn and wheat, soybeans can draw nitrogen directly from the air through their root systems, making them less dependent on purchased fertilizer. As corn acreage declines, some farmers are expected to plant soybeans instead, which may dampen the price rise for soybeans in the short term. However, the situation is complicated, by the fact that Brazil, which accounts for nearly 60 percent of global soybean exports, imports roughly half of its fertilizer through the Strait of Hormuz. Disruptions to Brazilian supply chains could tighten the soybean supply ahead of the Southern Hemisphere’s growing season in later 2026.

Wheat is under pressure from two fronts. Higher fuel costs are increasing transportation costs for grain shipped from major producing countries to import-dependent regions. Reduced fertilizer availability threatens yields in countries that depend on synthetic nitrogen for competitive production. As mentioned last week, the world’s wheat situation was already fragile. Russia's 2022 invasion of Ukraine disrupted Black Sea shipping and pushed Chicago wheat futures prices to over twice their current levels. Ukraine has since fallen from a top-five position among the world's wheat producers to ninth place in 2024 (FAO, 2025). The fertilizer crisis now layering on top of that starting point represents a second supply-side pressure that markets have not yet fully priced in.

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Trump's announcement on Monday that planned strikes against Iranian energy infrastructure would be postponed for five days caused oil prices to drop by up to 14 percent and pulled grain futures down. Markets are pricing in the possibility of a ceasefire. However, a ceasefire would not solve the fertilizer problem. Restarting production and transport after a disruption of this scale takes time. Plants that have been shut down can take weeks to bring back online, and the planting window does not wait. This is no longer just a price shock but a risk of an actual production shortfall, with effects that will feed through with a lag of several months. If the blockade persists into April, import-dependent countries such as India, Bangladesh and Pakistan will face genuine shortages during an active growing season, with consequences that risk spreading further through global grain markets. Some of this year's harvest potential has already been lost, regardless of what happens at the negotiating table.