The global fertilizer crisis and food security are exacerbated by tensions in the Middle East
Introduction: The specter of a global food crisis looms
Economic experts and analysts are warning of serious repercussions from the US-Israeli war on Iran, now in its third week, which has caused severe and unprecedented disruption to the global fertilizer market. This escalating conflict puts global food security, particularly in developing countries, at risk in the near term, according to credible economic reports highlighting the crisis in supply chains.
Historical context and strategic importance of the region
Historically, the Middle East has been a major artery for the world's energy and petrochemical industries. The nitrogen fertilizer industry relies heavily on natural gas as a raw material. Past crises, such as the outbreak of the Russian-Ukrainian war in 2002, have demonstrated the fragility of food supply chains and their close link to energy and fertilizer prices. Today, approximately 20% of the world's oil and liquefied natural gas trade passes through the strategic Strait of Hormuz. The near-total closure of the strait, coupled with missile and drone attacks in various parts of the Gulf, forced vital energy facilities to shut down, creating a cascade of disruptions to the global agricultural sector.
The repercussions of the conflict on local and regional production
As a result of these geopolitical tensions, major fertilizer plants in the Gulf region and beyond have been shut down at a critical juncture, just as farmers in the Northern Hemisphere are preparing for spring planting—a timeframe that leaves no room for delay. Regionally, Qatar Energy halted production at the world’s largest urea plant after gas production was suspended following attacks on its liquefied natural gas facilities. And in Egypt, which supplies 8% of the world’s urea, the country is facing severe difficulties in producing nitrogen fertilizers after Israel declared force majeure on gas exports to the country.
International impact and supply chain disruptions
The impact wasn't limited to the Middle East; it extended to major global markets. In India, one of the world's largest urea markets and home to roughly one-fifth of the world's population, production was reduced at three major plants due to declining Qatari gas supplies. India relies on the Middle East for more than 40% of its urea and phosphate fertilizer needs and may face delays in receiving a massive 1.3 million-ton urea shipment. In Bangladesh, four out of five fertilizer plants were shut down. Brazil, which is almost entirely dependent on urea imports (half of which pass through the Strait of Hormuz), faces a serious threat. In the United States, farmers reported a 25% shortage of fertilizer supplies, with store shelves nearly empty.
Crazy price jumps and bleak forecasts
Regarding prices and trade activity, Scotiabank predicted that global urea exports would fall to around 1.5 million tons in March, compared to 3.5 million tons (excluding Chinese supplies) or 5 million tons (including China) under normal circumstances. Argus data showed that urea export prices in the Middle East jumped 40% to over $700 per ton, compared to less than $500 before the war. In the US, prices rose by 32%. Analysts believe that nitrogen fertilizer prices could double if the war continues, especially given the disruption of supplies from Russia (the world's largest fertilizer exporter) due to Ukrainian drone attacks and the restrictions imposed by China on its exports.
Conclusion: Food security is at risk
Marina Simonova, a commodities market analyst at Argus, confirms that roughly half of the world's food is grown using fertilizers. This means that any prolonged disruption to supplies would have catastrophic and far-reaching consequences for global food availability and prices, particularly in developing countries where fertilizers represent up to 50% of grain production costs, potentially triggering a wave of food inflation that could cripple already fragile economies.
