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- The ongoing conflict affecting the Strait of Hormuz region is disrupting energy and fertiliser flows, with measurable impacts on costs and growing risks for food systems, trade and vulnerable economies.
GENEVA, Switzerland – The disruption is linking energy markets to food systems, with growing implications for trade and development:
- Shipping through Hormuz has collapsed, with transits down by over 95 percent, disrupting energy and fertiliser flows
- Energy prices have surged, with oil and gas rising sharply across regions
- The region is central to global fertiliser supply, both as a producer and a key trade route
- Rising energy, fertilizer and transport costs are increasing risks to food production, supply and prices
The escalation of the conflict affecting the Strait of Hormuz region, including Iran and the Gulf States, is increasingly reflected in fertiliser markets, linking disruptions in energy and shipping to agricultural markets, future food supply and trade.
Energy disruptions feed into fertiliser markets
The Strait of Hormuz is a critical artery for global energy and fertiliser trade, carrying around a quarter of seaborne oil as well as significant volumes of liquefied natural gas and fertilisers.
Since the escalation of the conflict, shipping activity through the Strait has fallen dramatically. Daily transits dropped from an average of 103 vessels in the last week of February to single digits within weeks, effectively bringing flows close to a standstill.
Energy markets have reacted immediately. Oil prices have surged sharply, while natural gas prices have risen steeply across both Europe and Asia – in Asia, prices have roughly doubled, with Europe seeing similarly sharp increases.
This matters for fertilisers because natural gas is a key input in the production of nitrogen-based fertilisers such as urea and ammonia. As gas prices rise, fertiliser production costs increase, pushing prices higher.
The effects are already visible. Prices for nitrogen-based fertilisers have risen significantly, with smaller but noticeable increases in phosphatic fertilisers.
The region’s role goes beyond energy. It is also a major producer of key inputs such as sulphur, used in phosphatic fertilisers, and a central hub for global fertiliser trade. Around one third of global seaborne fertiliser volumes pass through the Strait.
For major importing countries, particularly in Asia, disruptions to energy and fertiliser flows are closely linked. Reduced access to natural gas and higher costs can directly affect fertiliser production, availability and trade.
Trade exposure to fertilisers amplifies the shock
The fertiliser trade is highly concentrated, increasing exposure to disruption. Countries in the region account for 13 percent of global exports of nitrogen and 9 percent of phosphate fertiliser nutrients.
Disruptions to both fertiliser inputs and trade flows are already pushing prices higher, particularly for nitrogen-based fertilisers, with more moderate increases in phosphatic products.
Fertiliser use is essential for agricultural production and trade worldwide. Major exporters – from Brazil to India – rely on fertiliser imports, linking input markets directly to global food supply. In many developing countries, fertiliser access is equally critical for staple food production. Dependence on supplies from the Gulf is significant, including in countries such as Sudan, the United Republic of Tanzania and Somalia.
This reliance coincides with limited capacity to absorb price increases or secure alternative supplies. Many import-dependent economies face tight fiscal space, external imbalances and constrained access to finance, reducing their ability to respond to rising costs.
While food insecurity is often associated with food imports, it is also closely tied to access to essential agricultural inputs. Disruptions to fertiliser supply therefore risk affecting production, yields and food availability.
Costs rise across supply chains
The disruption is also driving up transport and trade costs.
Freight rates for oil tankers have risen by more than 90% since late February. Bunker fuel prices have nearly doubled, while war risk insurance premiums have surged, with some insurers withdrawing coverage altogether for vessels operating in the Persian Gulf.
As a result, shipowners are being forced either to suspend transits or absorb sharply higher insurance costs, with premiums rising several times over for each voyage.
These higher transport and insurance costs are feeding through to fertiliser prices and, in turn, to agricultural production and exports.
Implications for food systems and development
Historical patterns show that increases in energy prices are typically followed by higher fertiliser prices. Persistently high fertiliser costs can, in turn, affect food supply, particularly when inputs become less affordable for producers.
Higher fertiliser costs influence planting decisions – including crop choice and total area planted – and affect input use and yields, with impacts materialising over time.
For developing economies, these effects are compounded by existing structural constraints. Many face high debt burdens, limited fiscal space and rising borrowing costs. In this context, higher prices for energy, fertilizers and transport place additional strain on public finances and household budgets. These challenges are further intensified by limited access to finance, which reduces producers’ ability to absorb rising costs.
A broader signal for commodity trade
The current situation illustrates how disruptions linked to the conflict can transmit across interconnected commodity markets.
Energy, fertilizers and food are closely linked through production and trade, meaning constraints in one area can quickly affect others, with implications for food security, trade and development outcomes.
The scale of these effects will depend on how long disruptions persist. Current trends point to increasing pressure across commodity markets and supply chains.
The post From Gas to Grain: Fertiliser disruptions raise risks for food security and trade appeared first on Caribbean News Global.
