Iran Conflict Drives Surge in Global Commodity Market

Global Fertiliser Supply Tightens as Farmers Enter Critical Planting Window

The global food chain is facing a new pressure point, with fertiliser supply constraints looming large as farmers enter a critical planting window. This raises the risk of higher food prices later this year.

Key Statistics:

• 30% of global fertiliser trade passes through the Strait of Hormuz, a route severely impacted by disruptions linked to the Iran war.
• 50% increase in urea prices and 20% increase in ammonia prices since the war began.
• $700 per metric ton, the current cost of FOB granular urea in Egypt, up from $400–$490 before the conflict.

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Supply Chain Under Strain

The core issue is geography, with the Middle East being a major exporter of nitrogen fertilisers and the Strait of Hormuz a key chokepoint for those flows. Disruptions have slowed trade significantly, with around 30% of exportable supply, including from Saudi Arabia, Qatar, Bahrain, and Iran, currently unavailable to the market.

Nitrogen Fertilisers: The Real Pressure Point

Nitrogen fertilisers, such as urea, are critical because they must be applied every season. Farmers cannot defer nitrogen applications, making the current disruption more consequential. The region accounts for roughly one-third of global urea trade, 25% of ammonia, and nearly half of traded sulfur, making the disruption system-wide.

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Food Inflation Risk Building

Analysts say existing inventories may cushion the near term, but if fertiliser shortages persist, lower yields could follow later in the year. Even a modest decline in yields could translate into higher food prices. Countries with high import dependence, such as India and African nations reliant on grain imports, are seen as vulnerable to price spikes.