The Gap in Global Fertilizer Supply: Why Is the Conflict Between the U.S., Israel, and Iran Exacerbating World Hunger?

The escalation of tensions in the Middle East over the past month, amid the conflict between the United States, Israel, and Iran, has raised issues that go beyond military costs. Given the blockade of the Strait of Hormuz imposed by the Iranian government and exacerbated by the U.S. naval blockade in the same area, the choking of maritime routes in the Persian Gulf for the transport of oil, natural gas, and fertilizers has become a barrier to global agricultural supply chains. With the restrictions imposed in the Strait, a “crack” is forming in the global economy that highlights the issue of food insecurity, due to inflationary pressures pointing to a rising trend in food prices on a global scale.

As geopolitical shocks in the region continue, the damage is not limited to the restricted transport of these foodstuffs; it primarily undermines the global supply of fertilizers essential for the cultivation of agricultural commodities. In this sense, the war with Iran negatively impacts agricultural sector productivity, given the global demand for two fertilizers essential to this process: nitrogen and phosphate. Abundant in the Persian Gulf region, the blockade of the Strait of Hormuz prevents the passage of a large portion of these products, given that in 2024 up to 30% of global fertilizer trade passed through the strait to facilitate its export to the rest of the world.

According to data from the International Food Policy Research Institute, the Persian Gulf countries represent the largest regional exporter of urea and ammonia—both derived from nitrogen—and the second-largest exporter of diammonium phosphate. In addition, the Gulf region leads in the export of liquefied natural gas (LNG), enabling fertilizer production in other countries that lack this resource within their borders, such as India, Bangladesh, Pakistan, and Turkey. This means that a reduction in the supply of this gas, caused by attacks or blockades against producing countries, destabilizes the global fertilizer market, since LNG is used as the primary energy source for producing ammonia, which is used in most nitrogen-based fertilizers.

Because it is transported predominantly in the form of LNG, natural gas relies on maritime routes for global trade. However, due to the current blockade of the Strait of Hormuz, the interruption of exports by countries in the region — particularly from Qatar, which shut down its natural gas plants following Iranian attacks — primarily harms those countries heavily dependent on gas from the Gulf, such as India, which announced a reduction in its fertilizer production and is attempting to offset this through subsidies for farmers while hostilities continue. The WTO itself states that “fertilizers are the number one source of concern today.”

This vulnerability has become more evident in South Asian and African countries, which import critical components for fertilizer production, such as ammonia, urea, and phosphate. Ammonia and phosphate are primarily exported by Saudi Arabia. Meanwhile, Iran and Qatar lead with 36% of urea exports in the global market, with India and South Africa being two of their main importers. In the case of African countries, vulnerability is evident amid a considerable expansion of domestic fertilizer production, which is, however, largely geared toward export. As a result, domestic consumption, still largely dependent on imports, remains subject to price volatility in the international market.

In this context, the disruptions caused in the global supply chain by the conflict—as was the case during the 2022 crisis, triggered by the war between Russia and Ukraine—followed by a significant increase in fertilizer prices, primarily impact countries that depend on this production to maintain stable domestic agricultural output, namely the poorest countries. The 60% increase in the price of urea over the past month, according to the CRU Group, proves that, in the long term, this scenario may become unsustainable, alarming farmers and reducing the purchasing power of consumers of the food produced. Therefore, restricting passage through the Strait of Hormuz for much longer also means progressively denying food security to a considerable portion of the world’s population.

Meanwhile, the United States, which produces 65% of the fertilizers consumed domestically, has sought only to minimize the economic impacts of the conflict by easing sanctions targeting Belarusian potash producers, as potash is an essential component in fertilizer production. In addition, the country has suspended sanctions on Russian oil in an attempt to curb price increases linked to the conflict.

Nevertheless, the case of the war in Ukraine has shown that new routes can emerge in times of crisis, which has already occurred in the use of alternative energies to replace natural gas in fertilizer production, such as through the use of coal. However, as countries increase coal consumption and burning in this process, new problems arise associated with the increase in their carbon footprint, contributing to the worsening of climate change.

Crucially, the stabilization of the fertilizer market in the face of this sixth major shock since the COVID-19 pandemic in 2020 depends on a reduction in hostilities between the U.S., Israel, and Iran. The focus now tends to be on prioritizing the strategic export of fertilizers for humanitarian purposes, with the aim of ensuring food security for citizens of the poorest countries that depend on inputs capable of producing fertilizers critical to stable agricultural production.

Although food systems have shown a relative recovery since the disruptions caused by the COVID-19 pandemic and the war in Ukraine, the current conflict between Iran and the United States poses new risks to global food security, particularly due to the impacts on the fertilizer market, whose supply and supply chains significantly influence agricultural production and food inflation.

While fertilizer prices tend to rise, international commodity prices are falling, creating an unfavorable relationship between production costs and input costs, which typically leads to reduced fertilizer use, which in turn reduces agricultural production. A prolonged increase in fertilizer prices may particularly affect crops with high nitrogen requirements, leading to sharp price increases for these food products. The fertilizer and energy markets are inelastic, meaning prices can rise much more than changes in traded volume suggest. If farmers produce with fewer inputs, yields will be lower by the end of this year and in 2027, with rising food prices and retail food inflation likely in the coming years.

Recent publications by the Food and Agriculture Organization of the United Nations (FAO) and the World Food Programme (WFP) have issued a warning about the potential worsening of global hunger due to hostilities between Iran and the United States. There is a close relationship between global energy and food markets, meaning that instability in the former is passed on to the latter, affecting food supply and, consequently, its price. The WFP warns that if the conflict does not end by mid-year and oil prices remain above $100 per barrel, an additional 45 million people could face hunger worldwide.

Beyond the energy sector, the importance of fertilizers for modern agriculture also poses a risk to global food security amid the conflict in the Middle East. Reduced fertilizer use can lower agricultural productivity and affect food security both directly and indirectly, particularly in more vulnerable countries. Countries in Asia, Africa, and Latin America, for example, are more sensitive to the impacts of these tensions due to their dependence on fertilizer imports from the Gulf. In these cases, even the most moderate price changes can significantly harm their agricultural sectors, which are of critical importance to their economies. Thus, reduced fertilizer supply affects countries already facing significant structural problems more acutely, reducing their agricultural production and households’ purchasing power.

Countries in the Persian Gulf region are also highly exposed to increased food insecurity caused by the crisis between Iran and the United States. Fluctuations in food supply create vulnerabilities, as many of these countries lack a strong agricultural sector due to climatic issues and water scarcity. In times of peace, this dependence is relatively sustainable, but amid regional tensions, imports of foods such as wheat, rice, sugar, and vegetable oils are hampered by logistical challenges and instability in maritime transport.

If the impasse is not quickly resolved, it will be necessary to consider preventive measures, particularly requesting that multilateral institutions provide financing to countries at risk of losing access to basic fertilizers. To this end, the International Monetary Fund’s balance-of-payments credit lines and the Food Shock Window could be utilized, following the Food Import Financing Facility proposed by the FAO in 2022. This would allow countries that need fertilizers today to obtain them quickly without triggering distorted competition due to subsidies.