The closure of the Strait of Hormuz has blockaded roughly 30% of the Middle East’s annual fertilizer exports, helping push crop prices to a three-year high. The International Food Policy Research Institute warns the fertilizer squeeze could deepen into a food crisis, and a new UN report says 9 to 18 million more people could go hungry.
Crop prices reached a three-year high, squeezed by heat waves, intensifying Black Sea conflict, and volatility in fertilizer markets tied to the war in Iran and the closure of the Strait of Hormuz. Since the strait shut to shipping traffic earlier this year, 3.9 million tonnes of urea exports — about 30% of the Middle East’s annual fertilizer trade — have been effectively blockaded.
Fertilizer supply chokes at the source
Synthetic fertilizer is a petroleum product, so markets for urea and phosphate react sharply to oil shocks and supply disruptions. About one-third of the world’s urea imports come from the Middle East, which means the strait’s closure lands directly on global fertilizer availability. Prices spiked after the strait first closed at the end of February, then stabilized. Yet the IFPRI now describes a fertilizer input crisis that could soon develop into a full food crisis, especially in poorer countries.
Prolonged conflict threatens fresh volatility
Prolonged conflict threatens sustained volatility as factories cut fertilizer output and stockpiles risk spoiling. Production facilities are running at reduced rates to prevent excessive stockpiling, the IFPRI reports, and while urea can be stored for several months, heat and moisture can damage its quality. As a result, the risk of substantial fertilizer shortages is rising the longer the conflict lasts and the strait stays shut.
Black Sea war compounds the squeeze
The pressure is not confined to the Middle East. Renewed conflict around Ukrainian Black Sea ports is disrupting shipments of staple grains. Ukraine’s exports of corn, barley, wheat, and meslin already sit far below their 2020 levels, before Russia’s invasion. Because Ukraine is a major agricultural exporter, that deficit continues to weigh on global food security.
UN warns millions more could go hungry
A new United Nations report warns that rising energy and fertilizer prices, driven by conflict including the war in Iran and Russia’s war in Ukraine, could push an additional 9 to 18 million people into hunger. The report found the average cost of a healthy diet rose nearly 25% between 2021 and now, from 3.44 PPP dollars per person per day to 4.28 PPP, with Latin America and the Caribbean facing the highest costs at 4.91 PPP. According to the Associated Press, IFAD President Alvaro Lario said “Whenever there is a conflict, also hunger, displacement and refugees increase.”
Source: Oilprice.com
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