Introduction
For decades, the Strait of Hormuz has primarily been recognized as one of the world’s most critical chokepoints for the transportation of crude oil and natural gas. However, developments in 2026 demonstrated that the strategic importance of this maritime corridor extends far beyond energy markets. The Strait of Hormuz is also a vital artery for global trade in fertilizers and fertilizer feedstocks, particularly urea, ammonia, and sulfur. Consequently, any sustained disruption to maritime traffic through the Strait can rapidly evolve from a regional logistics crisis into a global fertilizer supply shock and, ultimately, a food-security concern.
According to data published by the World Trade Organization (WTO), fertilizer shipments through the Strait of Hormuz were severely disrupted following the outbreak of the conflict in February 2026. Global urea prices, which had been trading at approximately US$400 per metric ton before the crisis, rose to more than US$850/mt in April before subsequently retreating to around US$453/mt in June as market conditions improved.
The scale of the issue becomes clearer when considering that approximately 19.2 million metric tons of urea transited the Strait of Hormuz in 2024. Gulf countries collectively accounted for roughly 43% of global seaborne urea exports. The disruption, therefore, is not simply a matter of temporarily suspending exports from one or two countries. A prolonged disruption in the Strait can affect a substantial share of the global urea supply structure.
1. Why Is the Strait of Hormuz Critical to the Urea Market?
Urea is a strategic commodity within the global agricultural value chain. Its production depends on ammonia, while ammonia production through the Haber–Bosch process relies predominantly on natural gas as the primary feedstock and energy source.
As a result, the urea market is simultaneously influenced by three fundamental variables:
- The price and availability of natural gas;
- Ammonia and urea production capacity;
- The cost and availability of maritime transportation.
The Persian Gulf has become one of the world’s major hubs for nitrogen fertilizer production because of its abundant natural gas resources, competitive feedstock economics, and substantial investment in petrochemical and fertilizer infrastructure.
Research published in 2026 indicates that approximately 39 million metric tons of fertilizer and fertilizer-related feedstocks transited the Strait of Hormuz in 2024. This included approximately 19.2 million metric tons of urea, 11.1 million metric tons of sulfur, and 3.5 million metric tons of ammonia, in addition to significant volumes of DAP and MAP.
From this perspective, Hormuz is not merely a shipping route. It is a critical link connecting natural gas, petrochemicals, fertilizers, agriculture, and global food security.
2. Iran’s Role in the Urea Export Crisis
Iran is one of the important urea producers in the Persian Gulf region. Its principal competitive advantages include access to natural gas feedstock and an established network of petrochemical complexes producing ammonia and urea.
Iran’s importance to the market is not limited to production capacity. A significant proportion of Iranian urea production is export-oriented, with Asian, African, and regional markets representing important destinations.
Consequently, when maritime traffic through the Strait of Hormuz is disrupted, the problem for Iranian producers is not simply an inability to sell their product. A broader chain of operational consequences emerges:
Production → inventory accumulation → storage constraints → lower operating rates → reduced exports → increased contractual risk → higher global prices
In 2026, ICIS reported that approximately 850,000 metric tons of urea were stranded in Iran and the Arab Gulf, including approximately 500,000 metric tons located in Iran.
This demonstrates that even when a petrochemical complex is technically capable of maintaining production, the absence of a reliable export route can become almost as significant a constraint as the production capacity itself.
3. The Supply Shock: How Hormuz Differs from Previous Urea Market Disruptions
The Strait of Hormuz crisis differs fundamentally from the fertilizer market shock that followed the outbreak of the Russia–Ukraine war in 2022.
During the 2022 crisis, part of Russia’s fertilizer trade continued through the reallocation of cargoes, alternative buyers, and adjustments in international trade flows. In the case of Persian Gulf producers, however, the central problem is the physical accessibility of alternative maritime routes.
Research by North Dakota State University indicates that between 2020 and 2025, approximately 0.9 to 1.7 million metric tons of urea were exported from the Persian Gulf through the Strait each month on average. Gulf countries also accounted for a substantial share of global seaborne urea exports in 2024.
This means that a severe or prolonged disruption cannot easily be offset by increasing production elsewhere.
Even if producers in North America, North Africa, Russia, China, and other regions attempt to increase output, rapid supply substitution is constrained by:
- available production capacity;
- natural gas availability;
- port capacity;
- vessel availability;
- existing contractual commitments;
- freight rates;
- insurance requirements; and
- the time required to redirect global trade flows.
The problem is therefore not simply a shortage of production. It is a shortage of immediately accessible and deliverable supply.
4. The Direct Impact of the Crisis on Urea Prices
The urea market is particularly sensitive to supply disruptions because global spare production capacity is limited and production economics are highly exposed to natural gas prices.
World Bank data show that urea prices rose above US$850/mt in April 2026, approximately 80% above February levels and the highest level since April 2022.
The WTO similarly reported that urea prices almost doubled following the outbreak of the conflict, rising from approximately US$400/mt to more than US$850/mt in April before declining to approximately US$453/mt in June.
This price behavior illustrates an important characteristic of commodity markets:
The urea market does not price only the physical shortage that exists today; it also prices the risk of a future shortage.
In other words, even when sufficient inventories remain available in certain markets, the possibility of prolonged export disruptions from Iran, Qatar, Saudi Arabia, or other Gulf producers can encourage traders and major consumers to purchase earlier than usual.
This precautionary buying can push prices higher before an actual physical shortage materializes.
5. The Impact of the Crisis on Importing Countries
The impact of a disruption in the Strait of Hormuz is not uniform across countries. Economies with limited domestic urea production and high dependence on imports are inherently more vulnerable.
The most exposed markets include parts of:
- South Asia;
- East and Southeast Asia;
- Africa;
- the Middle East outside the major producing countries; and
- selected European markets.
The WTO has warned that African and Asian economies are particularly vulnerable because of their greater dependence on imported fertilizers.
Large importers such as India can amplify market pressure by increasing precautionary or emergency purchases. When a major importer enters the international market to secure additional volumes, the amount of freely available supply for other buyers declines, potentially driving prices higher across multiple regional markets.
The result can be a competitive bidding environment in which buyers with stronger purchasing power secure cargoes while smaller or more financially constrained buyers face increasingly difficult procurement conditions.
6. From the Urea Market to the Food Market
The most important consequences of the Hormuz crisis may ultimately emerge not in the petrochemical sector, but in global food markets.
Urea is one of the principal sources of nitrogen used in modern agriculture. A sustained reduction in nitrogen fertilizer application can, depending on the crop and region, reduce yields per hectare.
The transmission mechanism can be summarized as follows:
Hormuz disruption → reduced urea availability → higher fertilizer prices → lower farmer purchasing power → reduced fertilizer application → potential decline in crop yields → higher food prices
This process is neither immediate nor uniform. Farmers may rely on existing inventories for one or more planting seasons, substitute other nutrient sources, optimize application rates, or temporarily reduce fertilizer consumption.
However, if the disruption persists over an extended period, its impact on agricultural production can become significantly more pronounced.
Research by the International Food Policy Research Institute (IFPRI) similarly warns that sustained fertilizer price increases could reduce fertilizer use and crop yields, with Africa and South Asia among the most vulnerable regions.
The issue should therefore be viewed not merely as a commodity-price shock but as a potential agricultural input shock with implications for food security.
7. The Second-Order Effect: Ammonia and Sulfur Are Also Affected
Market attention naturally focuses on urea, but the Hormuz disruption is fundamentally a multi-commodity crisis.
In 2024, approximately 11.1 million metric tons of sulfur and 3.5 million metric tons of ammonia transited the Strait.
This is particularly important because sulfur is a critical feedstock in the phosphate fertilizer value chain. Sulfuric acid is required to process phosphate rock and manufacture products such as DAP and MAP.
Consequently, disruption to sulfur exports can affect countries that are not directly dependent on Gulf urea.
The crisis therefore operates through two distinct channels:
Channel One
Direct disruption of urea exports → higher urea prices
Channel Two
Disruption of sulfur and ammonia exports → higher production costs for other fertilizers → higher DAP, MAP, and related fertilizer prices
The ultimate impact of the crisis can therefore be substantially broader than the urea market alone.
8. The Role of China and Other Producers in Managing the Crisis
One of the key variables determining the duration and severity of the crisis is the response of producers outside the Persian Gulf.
China is one of the world’s largest urea producers, and its export policy can materially influence the global supply-demand balance. An increase in Chinese exports could partially compensate for lost Gulf supply, whereas tighter Chinese export restrictions could intensify upward price pressure.
The WTO has reported that trade policy responses, including export licensing measures, restrictions, and export bans, also intensified following the Hormuz disruption. At certain points, these measures could affect up to approximately 15% of global fertilizer trade. When the potentially affected Gulf trade is also taken into account, the share of global fertilizer trade exposed to disruption could rise to approximately 23.3%.
Consequently, the future price of urea will not depend solely on the status of the Strait of Hormuz. It will also depend on the simultaneous responses of China, India, Russia, Egypt, Algeria, the United States, and other major producers and consumers.
9. Scenarios for the Global Urea Market
Scenario 1: Sustainable Restoration of Maritime Traffic
Under this scenario, maritime security improves, transportation through the Strait gradually normalizes, and exports from Iran, Qatar, Saudi Arabia, and other Gulf producers resume.
Potential consequences include:
- increased physical supply;
- a reduction in the geopolitical risk premium;
- lower freight and insurance costs;
- reduced precautionary buying; and
- downward pressure on urea prices.
The market reaction observed during periods of improved shipping conditions in 2026 demonstrated how quickly fertilizer prices can respond to a reduction in perceived supply risk. The WTO noted that prices declined substantially after the initial April peak as trade conditions improved.
Scenario 2: Prolonged Disruption
If maritime insecurity persists, the market could enter a fundamentally different phase.
Under this scenario:
- inventories in importing countries would decline;
- major buyers would enter the market for emergency procurement;
- freight rates would rise;
- war-risk insurance premiums would increase;
- producers outside the Gulf would face additional demand; and
- urea prices could move toward extremely high levels again.
The key issue would gradually shift from price discovery to physical availability.
Scenario 3: A Combined Energy and Fertilizer Crisis
This represents the most severe scenario.
If the Hormuz disruption simultaneously drives higher prices for natural gas, crude oil, freight, insurance, and fertilizers, producers in Europe and Asia could also experience significantly higher production costs.
In such circumstances, the crisis would no longer be simply a Gulf urea export crisis.
It would become a global fertilizer cost and supply crisis.
Because natural gas is a fundamental feedstock for ammonia production, any sustained increase in gas prices can transmit directly into the marginal cost of nitrogen fertilizer production.
10. Implications for Iran
From Iran’s perspective, the disruption of the Strait of Hormuz represents a two-sided economic equation.
Opportunity
Higher international urea prices can increase the nominal value of every exported metric ton of Iranian product. If reliable export routes remain available, Iranian producers and traders can potentially benefit from the global price premium.
Risk
However, a higher international price does not necessarily translate into higher revenue if the product cannot be physically exported.
For an exporter, the real economic equation is closer to:
Global selling price – freight – insurance – financial risk – delay costs – logistics costs = actual profit margin
If vessels are unwilling or unable to call at the loading port, or if freight and war-risk insurance costs increase substantially, a significant portion of the additional urea price can effectively be absorbed by logistics and risk costs.
Therefore, during a geopolitical crisis, access to vessels and reliable export routes can become as important as the availability of the product itself.
11. Changing Behavior of Buyers and Traders
One of the most important consequences of the Hormuz crisis is the transformation of the structure of urea transactions.
Under normal market conditions, buyers can largely compare cargoes on the basis of FOB or CFR prices.
During a crisis, however, additional variables become decisive:
- loading port;
- price validity period;
- vessel availability;
- war-risk insurance;
- potential route deviations;
- transit time;
- country of origin;
- payment mechanisms;
- sanctions and banking-compliance risk; and
- contractual enforceability.
Consequently, a urea cargo offered at a lower FOB price may not necessarily be more economical than a more expensive cargo supported by a secure and reliable logistics chain.
This has major implications for international trading companies.
In a disrupted market, the nominal product price is no longer the sole competitive variable. Deliverability itself becomes a commercial asset.
12. Urea Price Outlook
The 2026 market experience demonstrates that urea prices can experience exceptionally large movements within a relatively short period.
Prices moved from approximately US$400/mt at the beginning of the crisis to above US$850/mt in April before subsequently declining as market conditions improved.
Accordingly, urea price forecasting should be based on scenarios rather than a single fixed price target.
| Market Variable | Expected Impact on Urea Prices |
| Sustainable restoration of shipping through Hormuz | Bearish |
| Continued disruption of Iranian and Gulf exports | Bullish |
| Increased Chinese exports | Bearish |
| Chinese export restrictions | Bullish |
| Higher natural gas prices | Bullish |
| Lower agricultural demand | Bearish |
| Emergency procurement by India and other major importers | Bullish |
| Higher freight and insurance costs | Bullish |
| Declining inventories | Bullish |
The key issue in the coming months will therefore not be only the absolute price level. Price volatility and supply-risk premiums may become equally important variables for market participants.
Conclusion
The disruption of urea exports through the Strait of Hormuz cannot be regarded simply as a maritime transportation problem or a regional geopolitical event. The Strait occupies a strategic position in the global fertilizer trade, with substantial volumes of urea, ammonia, sulfur, and other fertilizer-related commodities normally moving through this corridor.
Available 2024 trade data indicate that approximately 19.2 million metric tons of urea transited the Strait, while Persian Gulf countries accounted for a substantial share of global seaborne urea exports.
The events of 2026 demonstrated the sensitivity of the market. Urea prices rose from approximately US$400/mt to more than US$850/mt within a relatively short period, while significant volumes of fertilizer became stranded or unavailable for international shipment.
From a market perspective, the critical question for the coming months is whether fertilizer exports from the Persian Gulf can return to a stable and predictable flow.
If maritime traffic is sustainably restored, physical supply will increase, the geopolitical risk premium will decline, freight and insurance costs should normalize, and urea prices could come under downward pressure.
If the disruption persists, however, the combination of reduced supply, higher freight and insurance costs, elevated energy prices, declining inventories, and precautionary procurement could push the global urea market into another period of exceptionally high prices and extreme volatility.
Iran occupies a particularly important position in this equation. The country is not only a significant regional urea producer but also depends on maritime export infrastructure for access to international markets. Therefore, for Iran’s urea industry, the central issue is not simply whether global urea prices rise. The more important question is whether higher prices can be converted into physical exports, reliable delivery, and ultimately collectible revenue.
The Hormuz crisis therefore delivers a broader message to the global fertilizer industry: food security is partly dependent on the security and resilience of the trade corridors that connect fertilizer production to agricultural markets.
For this reason, diversification of production sources, development of alternative transportation corridors, strategic fertilizer reserves, greater flexibility in international procurement, and reduced dependence on a single maritime chokepoint should become central elements of global fertilizer-market resilience.
In the years ahead, the strategic value of urea will increasingly be determined not only by how much fertilizer the world can produce, but also by where it can be produced, how reliably it can be transported, and whether it can reach farmers at an economically sustainable cost.