Fertilizer Crisis Deepens as Middle East Conflict Disrupts Supply Chains
Escalating tensions in the Middle East are triggering a significant disruption to global fertilizer production and supply chains, raising concerns about potential food shortages and price increases. The conflict, involving strikes between the U.S., Israel, and Iran, has halted production and stranded shipments of key fertilizer components, echoing and potentially surpassing the challenges seen in 2022.
Urea Production and Supply Chain Bottlenecks
According to the Financial Times, Iranian strikes have halted Middle Eastern production of urea, the most widely used nitrogen fertilizer globally. Gas shortages are also forcing fertilizer producers in South Asia to curtail output. Approximately half of the 2.1 tons of urea normally slated for export are now not being produced. Kpler data indicates that 1.1 million tons of fertilizers and raw materials, including 570,000 tons of urea, are currently stranded in the Persian Gulf.
Impact on Natural Gas Prices and Fertilizer Costs
The conflict is also “brutally” increasing the price of natural gas, a critical input in the production of nitrogen fertilizers from ammonia, which underpins roughly half of the world’s food production. Urea prices have already surged by 40 percent since the start of the conflict in the Middle East, as reported by the Financial Times.
Northern Hemisphere Sowing Season at Risk
These fertilizer shortages are occurring during the crucial Northern Hemisphere planting season, prompting agricultural experts to warn of lower harvests of staple foods like rice. Veronica Nigh, chief economist at The Fertilizer Institute, stated that if the current situation persists, it will be “much worse than in 2022.”
Strategic Importance of the Strait of Hormuz
The Middle East is central to global fertilizer and energy supply chains. Approximately one-third of the world’s urea exports transit through the Strait of Hormuz. Around 45 percent of global sulfur exports, essential for phosphate fertilizer production, also travel this vital route, which is now effectively closed.
Production Halts Across the Region
Qatari fertilizer company QAFCO has closed its 5.6 million tonne-a-year urea plant following the disruption of LNG operations at nearby QatarEnergy facilities. In India, fertilizer plants have reduced gas consumption to 70 percent of normal levels. Plants in Pakistan and Bangladesh have halted production entirely, as has Agritech Limited, one of Pakistan’s largest fertilizer producers.
Wider Food System Disruptions and Potential for Hunger
Unlike the 2022 crisis, which initially centered on Ukrainian grain exports, the current situation involves disruptions across multiple facets of the food system simultaneously. Economists predict that consumers may experience higher food prices even before fertilizer shortages impact harvests. Increased fuel and electricity costs are also driving up the cost of transportation, food processing, and cooking, according to Raj Patel, a food systems expert at the Lyndon B. Johnson School of Public Affairs. Patel added, “All of this means there will definitely be more hunger this year.”
Disproportionate Impact on Vulnerable Regions
The International Fertilizer Association (IFA) notes that some regions will be disproportionately affected, particularly those with a high concentration of smallholder farmers in parts of Africa and South Asia. Countries heavily reliant on imported fertilizers are also particularly vulnerable to affordability pressures globally.