Strait of Hormuz disruptions linked to the Iran war have choked off fertilizer shipments from the Middle East and pushed prices sharply higher, prompting a wave of emergency support and trade measures as governments try to shield farmers ahead of key planting seasons.
It is two months on from our previous issue, and almost none of the news has been good from sulphur and downstream markets. Only three sulphur cargoes are confirmed to have transited the Strait of Hormuz since the US and Israeli strikes on Iran began, all loaded at Ruwais, with destinations in India, Tanzania and Morocco, carrying a total of 160,000 tonnes. It is believed that a couple of Iranian vessels with a total of 75,000 tonnes may also have left covertly. But in spite of some Middle Eastern sulphur making its way to Saudi Red Sea ports or Duqm on Oman’s Indian Ocean coast, around 700,000 tonnes is still trapped on ships stranded in the Gulf, and coupled with production cuts in the region, it is estimated that over 1.2 million tonnes has so far been removed from the market.
Nitrogen markets, and urea in particular, have been impacted by a series of geopolitical shocks in recent years which have driven markets over and above normal market factors such as feedstock and shipping costs, crop prices etc.
The start of May saw urea prices start to decline from the yearly highs seen in mid-April, as buyers from India, the US, and Europe stayed away from the markets. India is not expected to return with another tender before late May or early June at the earliest, after booking 2.5 million tonnes for shipment through mid-June, covering immediate requirements, and with domestic production having improved and stocks at a healthy level of over 7 million tonnes. In the US, earlier concerns over May shipments have eased, with net import figures not as low as initially feared, and even some re-export of cargoes to Latin America where higher prices can be earned. With the potential for China to return to export sales towards the end of May and start of June, there was at least a hope that the worst of the current price spike may be over.
Shell's Pearl GTL plant in Qatar is partially offline for up to a year after a March attack on Ras Laffan, as US-Israeli strikes also hit Iran's Kaveh Petrochemical methanol facility, leaving production there unaffected.
An update on the impacts of the Middle East conflict on fertilizer markets.
The US and Israel attacks on Iran and the Iranian response have thrown commodity markets into chaos, with sulphur and sulphuric acid particularly affected.
The start of the new year has shown that 2026 is already proving to be a very eventful one, beginning with the US abduction of Venezuela’s president Nicolas Maduro, which has prompted questions over production at the country’s ailing nitrogen assets, as well as the potential for a future boost to gas supplies to Trinidad. Meanwhile the Iranian government faces its most sustained public challenge since the 1979 revolution, and possible US military intervention, threatening continued exports from the country. In Europe, the future of fertilizers’ inclusion in the Carbon Border Adjustment Mechanism (CBAM) has been thrown into doubt barely a week after the new regulations came into force, as France and Italy pushed for an exemption for crop nutrient imports.
Ju ne saw fertilizer markets – urea markets in particular – thrown into chaos by the widening of hostilities in the Middle East. Israel’s and then the United States’ strikes on Iranian nuclear facilities and the retaliatory attacks on Israel and Qatar for a while held out the potential for the conflict to widen, perhaps even leading to attempts to close the straits of Hormuz at the entrance to the Gulf, something not seen since the ‘tanker war’ of the 1980s when Iraq tried to cripple Iran’s oil exports during the eight year Iran-Iraq War.
The Iran-Israel conflict in mid-June placed the urea market on edge prior to a ceasefire announcement.