Nitrogen fertilizer prices have doubled since the start of the Middle East war

The war with Iran and the blockade of the Strait of Hormuz have halted nearly a third of seaborne fertilizer shipments, prompting most importers to look for alternative sources of supply to supply their agricultural sectors. At the same time, some major fertilizer producers have restricted exports, further driving up market prices.

Fertiglobe notes reduced purchases in Africa and Australia. Brazil has been vulnerable to fertilizer shortages. Urea exports from the Persian Gulf (mainly from Oman) fell to 300,000 tonnes in March compared to the usual 1.7 million tonnes.

The continued blockade of the Persian Gulf will lead to further increases in nitrogen fertilizer prices, which are already well above pre-crisis levels. The result will be an increase in the cost of grain, food products, and farmers' expenses.

On Friday, Iran announced the opening of the Strait of Hormuz, but on Saturday it again stopped ship traffic amid increasing tensions. The conflict between the US and Iran has been going on for 8 weeks, but negotiations between the countries have still not yielded results.

Farmers will be acutely affected by the shortage of nitrogen fertilizers, particularly urea and ammonia, which are needed to improve yields. In contrast, the need for phosphate and potassium fertilizers is lower, as they are partially retained in the soil.

Prices for agricultural products will increase much more slowly than for fertilizers and fuel, which increases farmers' losses, unlike 2022, when the war in Ukraine led to a sharp increase in grain prices.

Even after the opening of the Strait of Hormuz, it will take some time to restore supply volumes and reduce the fertilizer shortage, especially since some of the ships in the region are currently used as floating storage facilities.

Fertiglobe, which has facilities in Abu Dhabi, near Oman and the port of Fujairah, is looking for alternative routes to transport its products, including overland transport, although the volumes will be smaller than by sea. Representative offices in Algeria and Egypt allow the company to continue serving customers.