Global fertilizer markets feel impact of conflict in the Middle East
The Strait of Hormuz is a critical chokepoint for maritime traffic in the Middle East. The strait connects the Gulf of Oman and the portion of the Arabian Sea known as the Persian Gulf. On its north coast sits Iran and to the south, the United Arab Emirates and Oman.
The strait is a critical route for oil tankers from Saudi Arabia and other points. It’s estimated that over 20 percent of global oil and liquefied natural gas exports transit the Strait of Hormuz. The current Iranian conflict has implications for energy markets and the global economy.
In addition to oil supplies and lng, the Strait of Hormuz is also a critical bottleneck for the global fertilizer supply chain. Disruptions to maritime traffic through the Strait of Hormuz have an impact on global fertilizer supplies and prices as well as oil prices.
Eight months ago, Rabobank flagged the risks for global fertilizer markets of a potential Middle East conflict around the Strait of Hormuz. The conflict in June of 2025 now serves as reference point for the current Iranian conflict and its impact on this narrowest point in the global fertilizer trade.
The impact of the Iran conflict last year on global fertilizer markets was meaningful but ultimately contained. North African nitrogen fertilizer production was curtailed, which contributed to a sustained urea price premium throughout the year. The conflict also played a role in elevating global sulphur prices, alongside production issues in Kazakhstan and the Middle East, as well as export constraints from Russia. Still, because there was never a full closure of the Strait of Hormuz, the most severe scenarios were avoided in 2025.
This time, however, the situation is fundamentally different. The Strait of Hormuz is effectively closed—with vessel movements reduced to a trickle—and shippers are rerouting to avoid the Suez Canal. Insurance premiums have surged, LNG facilities have been damaged, downstream production (including urea) has been curtailed, refineries in Saudi Arabia are reducing runs, gas supply to Egypt is under force majeure, and European gas inventories are being reassessed. Taken together with current market pricing and fundamentals, these developments raise the risk that a prolonged conflict—especially one involving infrastructure damage—could push nitrogen fertilizer and phosphate markets toward a pricing paradigm distinct from that seen in the second half of 2025. This is not yet a forecast, but it is a very real risk.
As a result of this conflict, the fertilizer industry is concerned about potential declarations of force majeure, the most closely watched case being India’s recently awarded March‑delivery urea tender, where suppliers may now be unable to fulfil obligations. Force majeure claims could arise across the entire value chain.
A continuation of the current Middle East conflict could lead to an increase in fertilizer prices, Agricultural commodities have added a geopolitical risk premium though mostly indirectly—through higher energy prices and rising freight costs. Despite these pressures, global supplies across major ag‑commodities remain ample, limiting sustained upside. Fertilizers, however, operate under a fundamentally different dynamic. The Middle East is not just a transit route—it is central to nitrogen and ammonia production, and fertilizer markets are deeply tied to gas-linked production costs and regional energy prices. As a result, fertilizers are likely to absorb a far more persistent geopolitical risk premium.
Report Authors
Samuel Taylor
Senior Farm Inputs Analyst
Doriana Milankova
Senior Specialist, Farm Inputs & Sugar
Bruno Fonseca
Senior Economic Analyst
Frank Donker
Data Scientist
RaboResearch F&A
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