The escalating conflict in Iran threatens to send shockwaves through global food markets by strangling fertiliser supplies via the Strait of Hormuz, a narrow chokepoint that carries over 30 per cent of the world’s seaborne fertiliser trade according to USDA figures.
While oil price volatility grabs headlines, experts highlight the quieter danger to agriculture, where disrupted shipments of urea, potash, and phosphates could fuel lasting inflation in groceries.
Stephanie Roth, chief economist at Wolfe Research, warned in a Tuesday note, “Beyond energy, another risk receiving less attention is the potential knock-on effect on food prices, as fertilizer shortages push agricultural costs higher.”
Her estimates point to a potential 2 percentage point jump in U.S. food-at-home inflation, adding 0.15 points to headline figures atop energy’s 0.40-point drag, exacerbating the 2.4 per cent year-on-year rise reported by the Bureau of Labor Statistics for February.
Since hostilities erupted late last month, warships and mines have halted most commercial traffic through the 33km-wide strait between Iran and Oman, per Reuters accounts, timing disastrously with spring planting in the northern hemisphere. Gulf exporters like Qatar and Saudi Arabia shipped 12 million tonnes of urea last year alone, Bloomberg data shows, but now farmers in the U.S. Midwest, Europe, and China face shortages just as they apply these nutrients to boost root growth and yields.
“If fertilizer supply tightens during this window, farmers may reduce application rates,” Roth added, risking 5-10 per cent drops in corn and up to 8 per cent in wheat per International Fertiliser Association models, while U.S. urea import prices surged 30 per cent in early March according to The Fertiliser Institute.
The pain spreads widely. America imports 20 per cent of its fertiliser, including from Russia where supplies have already thinned post-sanctions. India depends on the Gulf for 40 per cent of its urea, and sub-Saharan Africa leans on regional phosphates, with World Bank forecasts warning of 20 per cent maize shortfalls.
Veronica Nigh, chief economist at The Fertiliser Institute, underscored the breadth. “This is a global impact on fertilizer costs. I would imagine that there would be much more passing on of these costs to consumers in this scenario, which is not something we have seen before.” Rerouting via the Cape of Good Hope adds 30-50 per cent to costs, Drewry analysts note, with U.S. stockpiles lasting only 2-3 months.
Yet amid the gloom, fertiliser giants like CF Industries see gains, with shares hitting record highs Monday on a 10 per cent weekly surge, the best since 2022. Policymakers mull emergency measures, but FAO experts urge long-term supply diversification to avert future crises.