The Hormuz Fertilizer Block Will Upend the World's Food Supply

The war that closed the Strait did not only stop oil. It stopped the soil.

On March 3, Petronet LNG filed a disclosure with Indian stock exchanges. The company, India’s largest gas importer, informed investors that its vessels could no longer safely transit the Strait of Hormuz to reach Ras Laffan, Qatar’s liquefied natural gas terminal. The announcement ran four sentences. It was not the lead item on any major business desk that morning. Three days later, India’s Department of Fertilizers told the public that the country maintained a “formidable buffer” of 177 lakh metric tonnes of fertilizers. Both statements were true. Only one of them mattered.

When Petronet’s tankers stopped moving, a chain broke that runs from a gas platform in the Persian Gulf to a rice paddy in Bihar, a cornfield in Mato Grosso, and a smallholder farm outside Nairobi. The Strait of Hormuz does not only carry oil. It carries roughly one-third of all globally traded fertilizer: the urea, ammonia, phosphates, and sulfur that enter the soil before any harvest is possible. Since the joint US-Israeli strikes on February 28 and the IRGC’s effective closure of the waterway in response, maritime traffic through the Strait has collapsed by nearly 97 percent according to IMF Portwatch data. Millions of tonnes of agricultural inputs are stranded inside the Gulf with no viable alternative route out. The northern hemisphere’s spring planting window opened two weeks ago. It does not stay open.

The System That Built This Exposure

The concentration of global fertilizer production inside the Persian Gulf was not accidental. It was the outcome of the most reliable economic logic in modern industrial history: cheap, abundant natural gas. The Gulf sits atop roughly 40 percent of the world’s proven gas reserves, and the Haber-Bosch process, which converts atmospheric nitrogen into ammonia using natural gas as the primary feedstock, made that geography irresistible for capital from the 1960s onward. Natural gas accounts for approximately 80 percent of nitrogen fertilizer production costs. The Gulf’s gas prices made the arithmetic work for five consecutive decades, and the investment followed the arithmetic.

Qatar’s QAFCO, built at the Mesaieed Industrial City south of Doha, became by tonnage the world’s single largest urea production site: six integrated plants with a combined annual capacity of 3.8 million metric tonnes of ammonia and 5.6 million metric tonnes of urea. QAFCO alone accounts for approximately 14 percent of the entire global urea trade. Saudi Arabia’s SABIC Agri-Nutrients assembled a parallel complex at Jubail Industrial City: ammonia synthesis units, granulation facilities, loading terminals on the Gulf coast. Ma’aden’s phosphate mining and processing operation at Wa’ad Al Shamal, one of the largest integrated facilities of its kind in the world, sits in the same geography. Add Kuwait, the UAE, and Iran’s own output, and the Persian Gulf accounts for 43 to 46 percent of all seaborne urea exports, according to UNCTAD and Kpler shipping analytics. The Gulf states together supply 35 percent of the urea Asian countries import, 53 percent of their sulfur, and 64 percent of their ammonia.

That concentration was known. It appeared in UNCTAD risk assessments, in academic papers on global food security, in commodity trading models. It was treated as permanent infrastructure rather than concentrated vulnerability. The distinction collapsed on February 28.

What Stopped When the Ships Stopped

The disruption runs across every tier of the fertilizer supply chain, not only through finished product.

The first tier is feedstock. Natural gas is the raw material for nitrogen fertilizer, not just its energy source. Approximately 20 percent of global LNG exports transits the Strait of Hormuz. When Petronet’s tankers halted on March 3, GAIL, the state-owned Indian gas utility that distributes regasified LNG to industrial customers, was left without the volumes it supplies to fertilizer manufacturers. The government’s response, documented in filings and industry reports, was to invoke the Essential Commodities Act on March 9 and restrict natural gas deliveries to fertilizer plants to 65 to 70 percent of their stated requirements, prioritizing household LPG over agricultural input production. Indian Farmers Fertilizer Cooperative, IFFCO, one of the country’s largest urea producers, began shutting facilities or advancing scheduled maintenance. GNFC followed. In Bangladesh, fertilizer manufacturers dependent on Qatari gas supply halted production entirely. Egypt, which imports pipeline gas from Israel and lost that supply when the war began, entered an LNG spot market where prices were already 50 percent above their pre-war level.

The second tier is sulfur. Approximately 44 percent of global seaborne sulfur originates from countries west of the Strait and must transit it to reach buyers, according to The Fertilizer Institute. Sulfur is not a secondary input. It is the substance through which phosphate rock becomes bioavailable: the phosphoric acid that converts inert mineral into a form plant roots can absorb cannot be produced without it. Phosphate is one leg of the NPK triad that governs crop nutrition. Without sulfur, phosphate fertilizer production contracts regardless of how much rock a producer has in the ground.

The third tier is phosphate. Saudi Arabia and Israel together supply approximately 17 percent of global phosphate fertilizer exports, according to CSIS. Ma’aden’s Wa’ad Al Shamal facilities cannot move product. Israel’s ICL operations are disrupted. Morocco, the supplier of last resort that covers West Africa and parts of Europe, does not produce at volumes sufficient to absorb both shortfalls simultaneously.

The result across nitrogen, phosphorus, and sulfur is what analysts at ICIS and several major financial institutions are now calling a physical availability crisis. The distinction matters. A cost crisis resolves when buyers offer higher prices and supply responds. A physical availability crisis means the product is not in a location where any price can move it, because the ships are not running.

The Numbers, in Sequence

Urea traded at $482.50 per metric tonne on February 27, according to ICIS price data. By mid-March it had reached $720 per metric tonne, a 50 percent increase in fewer than three weeks. At the Port of New Orleans, the primary American import hub, prices rose 32 percent in the first five days of March alone, from $516 to $683. One agricultural advisory firm calculated that a tonne of urea cost American farmers the equivalent of 75 bushels of corn in December 2025; by March 9, that same tonne cost 126 bushels. Rabobank’s urea affordability index has fallen to its second lowest reading since 2010, exceeded only by where the Russia-Ukraine shock drove it in 2022.

Fitch Ratings has revised its 2026 ammonia and urea price projections upward by 25 percent and flagged that a prolonged Strait closure could force further revisions. Morningstar analyst Seth Goldstein assessed, in figures cited by Reuters, that nitrogen fertilizer prices could roughly double from current levels and phosphate prices could rise by approximately 50 percent if the disruption extends through the second quarter. As of March 12, more than 150 tankers and bulk carriers were at anchor outside the Persian Gulf, unable to secure war-risk insurance. Cargo insurance cancellations began forcing voyage cancellations within days of February 28. Maersk suspended Gulf cargo bookings on March 4. A captain willing to transit the Strait despite the drone threat would, in any case, choose to carry oil: the cargo value differential between crude and bulk urea is too large for fertilizer to compete.

India’s Managed Deception

On March 6, the Department of Fertilizers issued a public statement assuring farmers that India’s buffer stocks were “formidable.” Union Minister J.P. Nadda told Parliament days later that the country faced “no shortage” of chemical fertilizers. Neither statement was immediately false. The country’s urea stocks as of March 13 stood at approximately 62 lakh tonnes, roughly 10 lakh tonnes higher than the same point last year, according to government figures reported by Business Today. DAP stocks had nearly doubled to 25 lakh tonnes. NPK stocks were at a record 56 lakh tonnes.

The Zerodha research desk worked through the arithmetic. Using July 2024 kharif sales as a benchmark, India’s current urea stockpile provides roughly 1.8 months of cover. The Kharif season begins with the monsoon in June and accounts for more than 60 percent of India’s total annual agricultural output: rice, cotton, pulses, maize. Fertilizer must reach regional warehouses and village distributors before the first rains. The procurement cycle is not a June event; it is happening now. An 1.8-month buffer against a disruption with no clear end date and a June deadline is not a buffer. It is a countdown.

The government’s own actions contradicted its public position. The Essential Commodities Act invocation on March 9, which redirected gas away from fertilizer plants toward household use, was not a precautionary measure. It was a rationing decision made in response to a gas shortage that the public statements declined to acknowledge. By March 13, Indian officials had quietly approached their Chinese counterparts to request that Beijing ease its 2026 urea export quotas, a move reported in Bloomberg and confirmed through industry sources. The government told Parliament there was no shortage on the same afternoon its officials were in back-channel contact with Beijing asking for emergency supply.

The subsidy math behind this is not opaque. India’s central government subsidizes fertilizer to keep retail prices accessible for smallholder farmers. The 2022 Russia-Ukraine fertilizer shock pushed India’s subsidy bill to a record $28 billion. The 2026-27 fertilizer subsidy was budgeted at Rs 1.71 lakh crore before the war began, a figure CRISIL analysts flagged as already tight. A comparable or larger price shock in 2026 would consume fiscal space that New Delhi does not have, at a moment when the broader global stagflation triggered by the oil disruption is already pressuring the rupee and the current account.

Beijing Closes the Back Door

The supply disruption that began at Hormuz on February 28 might have been partially offset by China. It was not.

China is the world’s largest producer of urea, with approximately 70 percent of its capacity coal-based, insulating it from the gas price shocks that are crippling Gulf production. In 2022, when the Russia-Ukraine war removed a major supplier from global markets, Gulf producers filled part of the gap. In 2026, with the Gulf suppliers themselves absent, China was the only remaining source at anything approaching the scale required. India had asked Beijing to release emergency export quotas. A fertilizer conference held in Shanghai in the third week of March provided the answer. Five industry salespeople attending, all cited by Reuters, said they did not expect the fertilizer export restrictions to be lifted before August.

In mid-March, Beijing imposed a ban on exports of nitrogen-potassium fertilizer blends and certain phosphate varieties. The ban was not formally announced. It was reported by Bloomberg and confirmed through multiple industry sources. Added to pre-existing export quotas on urea, the restrictions mean that only ammonium sulfate remains freely exportable from China. Between half and three-quarters of China’s total fertilizer export volume from 2025, potentially up to 40 million metric tonnes, is now restricted under the new and existing controls, according to Reuters analysis of Chinese customs data. Matthew Biggin, a senior commodities analyst at BMI, put the logic plainly: “This pattern is consistent: China restricts supplies rather than coming to the rescue during global tightness. The export restrictions exist because of their tight domestic balance; they’re prioritizing food security and insulating their domestic market from price shocks.”

Russia has extended its own strict export quota system through May 2026, citing the need to prioritize what its agricultural ministry described as “friendly nations.” The language is diplomatic; the function is identical. Two of the world’s largest fertilizer producers outside the Gulf have chosen, in the same three-week window, to wall off their domestic supplies rather than deploy them to a market in crisis. This is not coordination. It is each government making the same calculation: domestic food prices are an internal political problem; global food insecurity is someone else’s.

New Delhi-based officials summed up the combined effect. “Buyers were hoping China would step in and fill the supply gap,” one fertilizer company official was quoted as saying in Reuters coverage. “This decision will only tighten supplies further.”

Qatar’s Closed Room

QAFCO’s position illustrates the structural absurdity of what the war has produced with a precision that policy language cannot match. Saudi Arabia built the Petroline, a crude oil pipeline that runs westward across the Arabian Peninsula to the Red Sea terminal at Yanbu, as a strategic bypass for exactly the scenario now playing out. When the Strait closes to oil tankers, Saudi crude can still reach export markets through the Red Sea. The Petroline is for crude oil, not for ammonia. No equivalent exists for fertilizer because no government, in the decades of building Gulf petrochemical capacity, thought to build one.

Qatar has no Red Sea coastline, no land border with a port not controlled by Saudi Arabia, and no pipeline to anywhere outside the Gulf. Its entire export geography runs through the 21-mile channel between Iran and Oman. QAFCO’s six plants are producing. There is nowhere for the product to go. The world’s single largest urea production site is open and full and silent to its customers, simultaneously.

SABIC’s negotiations with Indian procurement agencies and African agricultural development banks, which were ongoing before February 28, are frozen. The counterparties are searching for alternative suppliers in a market that, as the FAO’s chief economist Máximo Torero stated directly, has “no quick substitutes” for the loss of Gulf exports. Torero’s assessment is worth the specifics: Bangladesh, India, Pakistan, and Sri Lanka face the most acute South Asian exposure; Sudan, Kenya, and Somalia in East Africa; Turkey and Jordan in the wider region.

The Crop Calendar and What It Forecloses

The northern hemisphere spring planting window runs from roughly mid-February to early May. Vessels transiting from the Persian Gulf to the American Gulf Coast take approximately 30 days under normal conditions. Any fertilizer moving today, if vessels were moving, would arrive at or beyond the window’s close for the most time-sensitive spring crops. American corn farmers are already responding to that arithmetic. Corn is the most nitrogen-intensive major grain crop. Soybeans fix atmospheric nitrogen through root bacteria and require significantly less synthetic fertilizer input. The shift in planting intention is documented in commodity futures markets, where corn prices have risen as farmers openly discuss moving acreage to soybeans to reduce input exposure. If that shift materializes at scale across American planting decisions in March and April, the 2026 corn harvest runs short. Corn is the primary feedstock for American livestock, for ethanol blending, and for the grain export contracts that underpin food import capacity in the Middle East and North Africa.

Yara International, the Norwegian distributor with global blending operations, has already been forced to reduce production at its Babrala plant in India due to feedstock shortages. The company relies on Middle Eastern urea for its global supply chain and has no position outside the disruption zone that compensates for what it has lost. Its position is shared across the trading and distribution layer. Market participants at the production end are holding back offers, unwilling to price in conditions they cannot see clearly. Producers contacted by ICIS described the situation as “scary” and said they did not intend to offer products on open market terms. Buyers are making planting decisions in the absence of supply certainty that will determine yields that feed populations months after the contracts would have been signed.

South and Southeast Asia face a separate and later exposure. The monsoon rice planting cycle operates on a June-to-August timeline across Bangladesh, Sri Lanka, parts of India, Thailand, and Vietnam. Asian countries receive 64 percent of Gulf ammonia exports and 53 percent of Gulf sulfur exports, according to Kpler. Those flows have stopped. The substitutes available, including Russian supply now explicitly prioritized toward “friendly nations” and Chinese supply under an unannounced but operative export ban, do not reach the volumes required or the destinations most exposed. Indonesia, Malaysia, and Thailand sourced approximately a fifth of their fertilizer imports from China in 2025; between half and 80 percent of those flows are now restricted.

The Reserve Gap

The IEA coordinates international strategic petroleum reserve releases when oil supply shocks occur. Member governments maintain stockpiles calibrated to 90 days of net import cover, subject to collective release mechanisms when a disruption crosses defined thresholds. The mechanism is imperfect. It has also functioned.

No equivalent exists for fertilizer. There are no strategic urea reserves. No government maintains stockpiles calibrated to seasonal agricultural input requirements. No international body has the mandate to coordinate emergency fertilizer releases the way the IEA coordinates oil. The G7 countries that chose to provide the military cover for the operation that began on February 28 built a reserve system for the energy commodity that flows through the same 33-kilometre channel. They built nothing for the agricultural inputs flowing alongside it. The Fertilizer Institute’s analysis placed the consequence plainly: the people most willing to accept the risk of transiting the Strait, if any captain attempted it, would choose to carry oil. The cargo value difference ensures it. Fertilizer loses the queue every time.

The intellectual framework that permitted this outcome is worth naming without embellishment. The argument that deep trade integration constrains conflict, that the interdependency built through decades of Gulf petrochemical investment would function as a stabilizing force, was foundational to the foreign policy thinking of the governments that planned and executed the strikes on February 28. The Gulf’s fertilizer system was integrated into the global food supply on precisely those terms. The assumption was that integration would buffer. It transmitted instead, converting a military decision made in Washington into a food access crisis distributed across South Asia, East Africa, and Latin America among populations that had no seat in any of the rooms where that decision was made and no mechanism to contest it.