How escalating U.S.–Iran tensions and disruptions in the Strait of Hormuz could drive fertilizer costs higher for US farmers
Escalating U.S. military action in Iran is creating immediate and significant implications for global fertilizer markets.
With the Strait of Hormuz—one of the world’s most critical shipping corridors—now under heightened threat, analysts warn that U.S. growers could face higher fertilizer prices and increased volatility heading into the 2026 planting season.
The Strait of Hormuz is vital to global fertilizer movement. Approximately 40–50 percent of internationally traded urea and nearly one-quarter of all globally traded nitrogen fertilizers pass through this narrow waterway.
Following U.S. and Israeli strikes, ship traffic through the strait has already slowed, insurers have withdrawn coverage, and major carriers are rerouting vessels—moves that are driving up shipping times and freight premiums.
Because fertilizer markets operate on just-in-time inventory, even short-term interruptions can send prices sharply higher. Unlike oil, there is no global strategic fertilizer reserve to buffer disruptions.
Energy Prices Are Driving Fertilizer Costs Upward
Nitrogen fertilizers—urea, ammonia, and UAN—are produced using natural gas, making the sector extremely sensitive to energy markets. As tensions escalate, natural gas prices have surged, with European gas markets jumping 24 percent in early March on concerns about disrupted LNG flows from the Gulf region.
Iran holds some of the world’s largest natural gas reserves, and both gas production facilities and shipping routes are now at elevated risk. Any disruption raises manufacturing costs for nitrogen fertilizers almost immediately.
Regional Plant Shutdowns Tighten Global Supply
The conflict has already forced several key players to scale back or halt production: Iranian fertilizer producers have suspended urea and ammonia output. Gas supply disruptions have forced Egyptian and Jordanian urea plants offline.
Several experts are saying suppliers across the Middle East are pulling back from spot markets, contributing to higher localized and global urea prices. Saudi Arabia recently increased urea prices to $450 per tonne FOB, up from $402, while prices have also climbed in the U.S. and Brazil.
For global buyers, including North America, this tightening supply environment often leads to intense competition for alternative sources, lifting prices across the board—even in regions not directly dependent on Middle Eastern fertilizer.
Freight, Insurance, and Logistical Costs Surge
Three commercial vessels have reportedly been damaged by projectiles in the Gulf already as a result of the conflict. Shipping and insurance companies are repricing or halting Hormuz-bound activities.
Many vessels are now rerouting around the Cape of Good Hope, adding weeks to delivery schedules and significantly increasing transportation costs.
These premiums flow directly into the delivered price of fertilizers, affecting U.S. retailers and farmers alike.
Commodity marketing analysts warn that farmers who have not locked in nitrogen supplies may face notable price increases as planting nears, particularly if the conflict persists into spring.
Implications for Growers
Farmers are now face compounding risks:
1. Higher Nitrogen and Phosphate Prices
With a potential slowdown—or even a temporary halt—in Middle Eastern fertilizer flows, nitrogen and phosphate markets are primed for upward movement. Experts describe the risk as “potentially devastating” should the Strait of Hormuz close.
2. Increased Input Cost Volatility
Farm budgets already stretched by rising fuel, energy, and operational expenses will feel additional pressure. Elevated diesel prices—another direct result of Middle Eastern instability—add to the financial strain.
3. Supply Tightness During Peak Demand
The Northern Hemisphere is entering a critical buying period. With global inventories thin and demand steady, disruptions could leave some growers competing for limited supply or paying premiums for timely delivery.
What Farmers Can Do Now
While uncertainty dominates the outlook, growers can take several proactive steps:
- Evaluate and lock in fertilizer needs early to avoid unexpected spikes.
- Work closely with retailers to monitor availability and logistics constraints.
- Consider nutrient management strategies, including variable rate application or split applications to optimize efficiency during high-price cycles.
- Explore alternative supply sources where possible, though options may be limited given global dependencies.