The ongoing conflict affecting the Strait of Hormuz has triggered major disruptions in global energy and fertilizer supply chains, creating growing concerns for food security, trade, and economic stability. As one of the world’s most critical maritime routes, the Strait plays a central role in transporting oil, natural gas, and fertilizers. However, shipping activity has nearly come to a halt, with vessel transits dropping by over 95%, severely constraining the movement of these essential commodities.
The disruption has had an immediate impact on energy markets, with oil and natural gas prices rising sharply across regions. In Asia, gas prices have nearly doubled, while Europe has also experienced significant increases. This surge is particularly important because natural gas is a key input in the production of nitrogen-based fertilizers such as urea and ammonia. As energy prices rise, fertilizer production becomes more expensive, leading to higher global fertilizer prices.
The Strait of Hormuz region is not only a major energy corridor but also a key player in fertilizer production and trade. It supplies critical inputs such as sulphur and accounts for a significant share of global seaborne fertilizer exports. With around one-third of global fertilizer trade passing through this route, disruptions are directly affecting supply availability, especially for countries that rely heavily on imports.
These developments are placing increased pressure on agricultural systems worldwide. Higher fertilizer prices influence farmers’ decisions on crop selection, planting area, and input usage, which can ultimately reduce yields and affect food availability. The impact is particularly severe in developing countries, where access to fertilizers is already limited and financial constraints make it difficult to absorb rising costs or secure alternative supplies.
The situation is further compounded by rising transport and insurance costs. Freight rates for oil tankers have surged significantly, bunker fuel prices have nearly doubled, and war risk insurance premiums have escalated sharply. In some cases, insurers have withdrawn coverage altogether, forcing shipping companies to either suspend operations or bear much higher costs. These increased logistics expenses are feeding into fertilizer prices and, consequently, agricultural production costs.
For many developing economies, the combined effects of higher energy, fertilizer, and transport costs are creating serious economic challenges. Countries with high import dependence, limited fiscal space, and rising debt levels are particularly vulnerable. As borrowing costs increase and access to finance remains constrained, governments and producers face growing difficulty in managing these shocks.
Overall, the crisis highlights the deep interconnection between energy, fertilizer, and food systems. Disruptions in one sector quickly cascade into others, amplifying risks across global supply chains. The extent of the impact will largely depend on how long the disruptions persist, but current trends suggest increasing pressure on commodity markets, with significant implications for global food security and development.
