Middle East conflict leads to widespread fertilizer shutdown; experts warn that the global food crisis may surpass that of 2022.

The armed conflict erupting in the Middle East is severely damaging the global fertilizer supply chain, causing deep concerns in the market over a new round of food crisis.

QatarEnergy, the state energy company of Qatar, announced on Monday that its facility in Ras Laffan has completely halted production of sulfur, ammonia, and urea after suffering a drone attack. Meanwhile, Iran has taken all of its domestic ammonia capacity offline, and other regional producers are contemplating reducing output due to vessels being unable to pass through the Strait of Hormuz.

Fertilizer prices have surged sharply—Middle Eastern granular urea prices have increased by about $130 per ton since last Friday, currently quoted at $575 to $650 per ton; European ammonia futures have also risen steeply, with April trading prices at $725 per ton, about $130 higher than mid-February prices.

Svein Tore Holsether, CEO of Yara, Europe's largest fertilizer group, warned that external focus on oil and gas markets is "obscuring" the impact of this conflict on the fertilizer industry. Analysts point out that the destructive power of this crisis may exceed the food shock triggered by the Russia-Ukraine conflict in 2022, because once the Strait of Hormuz is blocked, it becomes a physical logistics barrier, not just a price disturbance.

Strait of Hormuz: The Strategic Chokepoint for Global Fertilizer Trade

According to the Financial Times on Thursday, the Strait of Hormuz occupies a pivotal role in global fertilizer trade. CRU data shows that roughly 35% of global urea exports are shipped through this waterway. Urea is the most widely used nitrogen fertilizer, and nitrogen fertilizer supports about half of the world’s food production. Moreover, this route carries 45% of global sulfur exports—sulfur is a key material in phosphate fertilizer production—and transports a large amount of ammonia, which is a core input for nitrogen fertilizer production.

The Middle East is one of the most important fertilizer-producing regions worldwide. QatarEnergy exported a total of 5.4 million tonnes of urea last year, accounting for about 10% of global seaborne trade. The shutdown of the Ras Laffan complex has directly cut off a major source of supply to the global market.

Sarah Marlow, Global Fertilizer Pricing Director at Argus, said Iran has taken all ammonia capacity offline, and other regional producers are assessing production reduction plans due to disrupted shipping.

Price shocks emerge, food inflation may transmit within weeks

The sharp rise in fertilizer prices is being transmitted downstream to food prices. Raj Patel, a food systems expert at the Lyndon B. Johnson School of Public Affairs, estimates that if supply interruptions continue, consumers will see bread prices rise in as soon as 6 to 10 weeks, egg prices will be affected in several months, and pork and broiler chicken prices will increase within 6 months.

The surge in energy costs is aggravating the pressure further. Natural gas is the core material for making ammonia and urea in nitrogen fertilizers, and rising gas prices will quickly push up production costs. Holsether revealed that the price of natural gas used by Yara in Europe for fertilizer production has soared from $10.6 per million BTU last Friday to over $20 on Monday, nearly doubling.

The timing of this impact is particularly sensitive. Farmers in Europe and parts of the Northern Hemisphere are entering their spring fertilization season—a stage where fertilizer procurement and application directly determine annual crop yield.

Analysts: This crisis may be more destructive than in 2022

Market analysts believe that the structural risks of this supply shock are even greater than in 2022. Chris Lawson, Head of Fertilizer at CRU, noted that while the price surge in 2022 was extreme, the market was able to adjust because Russian exports were not interrupted; this time, the blockade of the Strait of Hormuz represents a “physical barrier”, totally different in nature.

Patel also stated that the 2022 food shock was more direct because Ukraine was a major wheat exporter, but “this time the impact will be wider.”

Holsether expressed concern about the impact on the most vulnerable groups. “What worries me is that, as we saw in 2022, the cost was ultimately borne by the most disadvantaged,” he said, “We witnessed what that meant—hunger and famine appeared in many parts of the world.”

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