Eight weeks of conflict in the Middle East have engineered a fertiliser crisis that threatens to reshape agricultural economics from Brazil to Southeast Asia, with roughly 24% of the global bulk fertiliser supply now effectively shut in behind the Strait of Hormuz

While oil supply has dominated headlines since the conflict began, the fertiliser market is emerging as an equally consequential casualty – one whose full damage may not be visible until harvests start disappointing later in the year.

UN Conference on Trade and Development figures show that shipping transits through the Strait of Hormuz have dropped by over 95% since fighting started, with around 3,200 vessels trapped in the region at the outset. UK shipbroking group SSY calculates that the knock-on effect has locked in approximately 24% of the global bulk fertiliser supply. AXSMarine puts the volume of fertiliser stranded within the Gulf at around 833,800 metric tonnes, the majority of it urea – the world’s most widely used nitrogen fertiliser. Investment bank Jefferies estimates that the loss of Gulf nitrogen exports alone accounts for around 30% of global urea supply.

Compounding the physical blockage is a cost crisis in production. Natural gas accounts for up to 80% of the expense of producing urea, and rising gas prices are making output from alternative locations increasingly uneconomical. Phosphate and potash supply chains are facing additional disruption from conflict-adjacent logistics failures. According to shipping broker BRS, nitrogen fertiliser prices spiked by nearly 40% in March, while Jefferies reported all fertiliser prices were up 23% across the board.

The agricultural logic is unforgiving. When fertiliser costs cannot be covered by crop revenues, farmers reduce application rates, accept lower yields or switch to less input-intensive crops. SSY has already flagged a likely shift among US farmers toward soybeans, where per-acre fertiliser costs are roughly a third of those for corn. That rotation is a survival strategy, but its effects will ripple into next year’s crop supply.

Filipe Gonzaga, managing director of Swiss-based trading firm Bryce, told Splash the physical product has not disappeared – but the economics of moving it have become near-prohibitive. “There’s always a way, but this way may cost too much. This translates directly into higher input costs just as we move into critical agricultural planting windows globally,” he said.

Gonzaga identified the primary problem not simply as vessel delays but as the severe spike in war-risk insurance and spot freight rates, with the Persian Gulf acting as a foundational node for global nitrogen exports. Gulf producers are struggling to clear prompt tonnage, he said, forcing buyers to aggressively source from alternative hubs, including the Black Sea and North Africa, just to secure supply.

Price volatility is intensifying across the chain. Cost and freight prices for destination markets – particularly South America and Asia – are decoupling from origin values as shipping costs climb, with origin and destination prices now capable of swinging dramatically day to day.

“If this bottleneck persists, it goes beyond squeezing trader margins; it fundamentally shifts agricultural production economics and feeds straight into macro food inflation, as farmers will need the inputs and will pay higher prices,” Gonzaga warned.

Mark Williams, head of consultancy Shipping Strategy, said the fertiliser disruption could metastasise into a major problem for agricultural cargo flows in the second half of the year. Brazil, along with parts of Asia and Africa, is heavily dependent on imported fertiliser, and the timing is acutely awkward. If supply tightens during planting season and application rates fall, crop yields may suffer – meaning fewer grain cargoes moving in the latter half of 2025.

The International Grains Council believes most northern hemisphere growers are adequately covered for the current spring fieldwork period, but warns an extended crisis could alter planting decisions elsewhere later in the year.

Williams estimated that while the conflict may still offer some near-term support to bulk shipping through supply dislocation, slower steaming and cargo redirection, the medium-term risk is demand destruction driven by inflation, energy scarcity, fertiliser disruption and weakening industrial activity – a compound threat to freight markets that is only beginning to be priced in.

The growing fertiliser shipping crisis will be discussed in detail next week during the Agri-Commodities session at Geneva Dry, the world’s premier commodities shipping conference.