Escalating hostilities in the Strait of Hormuz are raising alarms not only for global oil markets but also for fertilizer supplies and downstream food prices. In their coverage, Euro News interviewed IFPRI’s Joseph Glauber on how the disruptions could ripple through agricultural markets.
The Strait—through which up to 30% of global fertilizer exports move—is a critical transit point for nitrogen-based fertilizers essential to crop production worldwide. According to IFPRI data cited in the report, Qatar, Saudi Arabia, Bahrain and Oman produce around 15 million metric tonnes annually of urea, DAP and anhydrous ammonia, relied upon by major agricultural producers including India, the US, Brazil and Australia.
Glauber emphasized why fertilizer markets are particularly exposed to shocks. While many products can be stored, he noted that “because they are of such high value relative to the underlying feedstock (e.g. natural gas), and the fact that natural gas is produced year-round, the costs of storage make it more economical to buy them as needed.” Orders typically track seasonal demand, meaning disruptions now can quickly affect planting timelines.
He also explained how timing plays a critical role in North America: “In the US, producers will often purchase agricultural fertilisers and chemicals in the autumn, so as to ensure sufficient supplies are available for planting.”
While experts expect only a small near-term impact, the broader risk stems from rising fuel and energy costs that could push food inflation higher. As Glauber told Euro News, “Higher oil prices and energy prices more generally could raise retail costs as post-farmgate transportation and processing costs increase. This could refuel food price inflation over time.”