War in Iran: Fertilizer Sector Warns of Lasting Supply Risk

Why It Matters

Disruptions in the Hormuz corridor risk fertilizer shortages, which could depress agricultural yields and pressure global food security. The situation underscores the need for supply‑chain resilience and domestic production capacity.

Key Takeaways

• Over 30% of global fertilizer trade moves through the Strait of Hormuz.
• Conflict has halted some Gulf fertilizer plants, tightening worldwide supply.
• Natural‑gas price surge pushes nitrogen fertilizer costs, >70% of production expense.
• Asia and Africa, heavy importers, may seek alternative sources amid disruptions.
• Spain urges domestic industry support to secure strategic fertilizer autonomy.

Pulse Analysis

The Strait of Hormuz has long been a chokepoint for energy and agricultural inputs, but the recent U.S.–Iran ceasefire highlights how geopolitical flashpoints can ripple through unrelated sectors. Fertilizer manufacturers rely on the corridor not only for finished products but also for the natural‑gas and sulfur feedstocks that power nitrogen and phosphate production. When the strait shuts, the immediate effect is a bottleneck in the flow of these commodities, prompting a cascade of price spikes that reverberate across global supply chains.

Beyond the logistics bottleneck, the conflict is reshaping cost structures for fertilizer producers. Natural‑gas, which makes up more than 70% of nitrogen fertilizer manufacturing expenses, has surged as global markets scramble for limited supplies. Simultaneously, sulfur—a key component for phosphoric acid—faces similar constraints, inflating the cost of phosphate fertilizers. These raw‑material pressures translate into higher farm‑gate prices, squeezing already thin profit margins for growers, especially in Asia and Africa where import dependence is high. The resulting cost pass‑through threatens to reduce fertilizer application rates, potentially curbing crop yields and amplifying food‑price volatility.

In response, policymakers and industry leaders are emphasizing strategic autonomy. Spain’s ANFFE calls for bolstering domestic production capacity, diversifying feedstock sources, and implementing support mechanisms for farmers facing elevated input costs. Such measures aim to insulate the agricultural sector from external shocks and preserve food‑security objectives. Over the longer term, the episode may accelerate investments in alternative nitrogen production technologies, such as green hydrogen, and encourage a broader shift toward resilient, locally sourced fertilizer ecosystems.