The Middle East conflict has caused international fertilizer prices to soar, potentially threatening global food production capacity.

Ask AI · How does the Middle East conflict affect the stability of the global food supply chain?

Since the outbreak of military actions by the U.S. and Israel against Iran, with the Strait of Hormuz being blocked, global fertilizer prices have surged, potentially jeopardizing the world’s capacity for food production and food supply.

According to media reports, among the nutrients essential for food production—nitrogen, phosphorus, and potassium—nitrogen-based urea and ammonia that promote the growth of leaves and stems are extracted from natural gas and produced by synthesizing hydrogen with atmospheric nitrogen. Gulf countries such as Qatar, Saudi Arabia, and Oman, which are rich in natural gas resources, are major exporters.

Agrochemical Guide, a subsidiary of China Chemical Industry News, published an article on April 7 stating that the Middle East is the world’s largest urea export region, with an annual export volume of about 25 million tons. Of that, Iran accounts for 40%-45% of the Middle East’s export volume. At the same time, the Strait of Hormuz handles about 20% of global liquefied natural gas transportation and about 30% of fertilizer transportation. The outbreak of conflict between the U.S. and Israel has dealt a severe blow to urea production and logistics trade in Middle Eastern countries such as Iran, Egypt, Saudi Arabia, and Qatar, and international urea prices and trade flows face a reshuffle.

After the fighting broke out, statistics from the World Bank show that representative fertilizer urea rose by 54% month-on-month in March. The World Bank’s Commodity Markets Outlook shows that the international price of urea was $726 per ton, up sharply from $472 last month. The year-on-year increase climbed to more than 1.8 times. This marks the highest level since April 2022, when fertilizer prices rose due to the Russia-Ukraine conflict.

Also, according to reports from Sinochem News, based on statistics by S&P Platts, on March 19, the price of granular urea in the Middle East had surged to $604–$710 (per ton, same below). Before the conflict, it was $435–$490, and at the beginning of the year it was only about $400. Foreign media reported that since the closure of the Strait of Hormuz, urea prices in Illinois, USA, have jumped by $230, marking an unprecedented two-week increase that has never been seen in the past 20 years.

The Bank of America had previously warned that this conflict could threaten 65% to 70% of global urea supply, and that prices have already risen by 30% to 40%. John Baffes, Senior Agricultural Economist at the World Bank, analyzed that “the chaos in Middle Eastern transport routes not only affects fertilizer and energy, but also affects the inputs needed for food production.”

Foreign media reported that in the Northern Hemisphere, the spring planting season has already begun. If the blockade of the Strait of Hormuz is extended, it will affect rice planting in Asia and sowing in the Southern Hemisphere that are planned to fully begin going forward.

Maximo Torero, Chief Economist of the UN Food and Agriculture Organization, said: “This will affect planting… global commodity supply will decline—including staple grains and feed, which will then affect dairy products and meat.” The organization noted that “unlike crude oil, fertilizers do not have strategic reserves that are regulated internationally. It is even harder to manage supply-chain chaos.”

However, according to the Agrochemical Guide article mentioned above, compared with the dramatic fluctuations in the international market, China’s fertilizer market has remained stable and orderly, with clear pricing advantages: nitrogen fertilizer prices are less than half the international level, and phosphorus fertilizer prices are more than one thousand yuan lower than international market prices; combined with ample domestic supply reserves and well-prepared stock at the grassroots level, this forms a sharp contrast to the tense situation in overseas agricultural supplies.