Fertilizer Prices Surge Amid US-Iran Tensions, Analysts Warn of Ongoing Volatility

Fertilizer Market Faces Turbulent Times Amid US-Iran Conflict

The Gulf fertilizer market is currently grappling with substantial disruptions caused by the US-Iran conflict, which began in early March 2026. This tension has led to significant price increases, particularly in urea, which has risen by over 50% since the conflict's onset. The situation escalates concerns about food security globally, as the Middle East plays a crucial role in fertilizer supply.

Supply Chain Disruptions and Rising Costs

According to reports, the Middle East supplies approximately 40-43% of global seaborne urea, more than 40% of sulfur, and around 30% of ammonia. Disruptions in this region quickly ripple through the international market, affecting food prices. Data from Argus Media indicates a staggering 65% jump in urea prices in the month following the conflict's outbreak, with ammonia and DAP (Diammonium Phosphate) also experiencing substantial price increases.

Analysts suggest that the sector is being squeezed due to production outages alongside logistical bottlenecks. The combination of tight supply and heightened demand is driving prices upward.

Production Challenges in the Gulf

Marina Simonova, the Head of Fertilizer Analytics at Argus Media, noted marked disruptions in production and supply chains across Gulf countries since the conflict's escalation. “Several production sites in Saudi Arabia, Qatar, and Iran have partially or fully halted operations due to safety concerns and export difficulties,” she explained. The reliance on the Strait of Hormuz for shipping adds to the logistical challenges.

Impact of Energy Sector Disruptions

The production of ammonia and urea is heavily reliant on natural gas, which has suffered due to damage to energy facilities amidst the unrest. Consequently, feedstock shortages have led to lower operating rates, while sulfur availability has also been compromised. The region’s fertilizer-dependent economy is at risk without timely rectification of these energy supply issues.

Price Dynamics and Market Outlook

As Simonova highlights, the supply-demand balance in the sulfur and nitrogen fertilizer markets is tightening, which will likely lead to ongoing price increases. She notes that reopening navigation through the Strait of Hormuz is essential for gradually restoring supply chains, but complete recovery is expected to take several weeks.

Brennan Ito, a Senior Equity Research Analyst at Riyad Capital, emphasizes the impact on importing countries like India, which could see increased reliance on imports amid rising prices. This demand pressure is further complicating the fertilizer landscape as India struggles with its own gas shortages affecting domestic production rates.

Predictions for the Future

Experts indicate that while prices may eventually stabilize, significant disruptions during peak agricultural seasons could maintain high price levels until at least 2027. Furthermore, the geopolitical situation and continued production and logistical constraints will likely create further volatility in the market, influencing both local and global agricultural practices.

Conclusion

The ongoing tensions in the Middle East are reshaping the fertilizer market, leading to sharp price increases and supply chain disruptions. As countries navigate these challenges, the impacts on global food availability and prices will be closely monitored. With India and other import-dependent nations likely facing increased challenges, the fertilizer market remains in a precarious state.