Fertilizer Matters EP49: Middle East Conflict - The Potash Market Anomaly

The Middle East war has not disrupted the physical supply of mined potassium (MOP), because production in Jordan and Israel does not rely on the Strait of Hormuz. However, soaring oil and gas prices have driven freight rates higher, turning CFR‑based MOP contracts volatile. Prices jumped to $400 per tonne by early April, outpacing the modest 8 % increase in the commodity itself. Compared with urea’s 59 % surge, potash remains the cheapest major nutrient, widening price spreads that now sit near $500 per tonne.

Despite higher freight costs, global potash demand has stayed robust. Buyers, facing steep price hikes for nitrogen and phosphates, are turning to MOP as the most affordable option, driving record imports in Brazil and other key markets during Q1. An early China MOP contract signed in November— the earliest on record— pulled millions of tonnes into the world’s largest importing market, tightening supplies elsewhere. The main geopolitical risks remain the proximity of Israeli and Jordanian plants to the conflict and potential Red Sea disruptions, which could raise logistics expenses further.

SOP prices are feeling a separate shock from the war because sulfur— a key feedstock for Mannheim‑type SOP— is sourced largely from the Gulf, where Red Sea shipping remains unsafe. Consequently, water‑soluble SOP in Egypt has risen about 20 % ($122/tonne) and East Asian grades 11‑14 % higher. European producers, many of which use primary SOP that does not require sulfur, have kept prices flatter. With sulfur costs staying elevated and new water‑soluble capacity of 600,000 tonnes expected in 2026, any prolonged supply squeeze could delay projects and push SOP premiums even higher.