Fertilizer disruption is emerging as the slower but broader inflation threat from the Iran conflict

The reason markets are taking this seriously is that Hormuz is a major artery not only for oil but also for agricultural inputs. Reuters reported that the strait is the conduit for about one-third of global fertilizer trade and 20% of the world’s export fuels. The Fertilizer Institute said nearly 50% of global urea exports originate from countries west of the Strait and transit through that waterway, while other reporting citing International Fertilizer Association data said five Gulf producers accounted for 34% of global urea trade and 23% of global ammonia trade in 2024. That means even countries that do not buy directly from Iran or the Gulf can still face higher prices through global benchmark repricing and freight disruption.

The price response has already been severe in some markets. Reuters reported that fertilizer prices at the New Orleans import hub jumped from $516 per metric ton to as much as $683 within days of the war’s outbreak. The Financial Times separately reported that Gulf disruption had pushed sulfur prices in China up 15% and that urea prices had surged 45%, underscoring that the problem is spreading through multiple feedstocks rather than remaining isolated to one product. Because sulfur is widely used in fertilizer production and the Gulf accounts for 45% of global sulfur exports, this compounds the risk that a shipping shock becomes a broader agricultural-cost shock.

What turns higher fertilizer prices into a finance story is timing. Reuters said farmers from France to Canada were already facing weak crop economics because of a global grains glut, and analysts warned that the current disruption could not have come at a worse moment because spring planting decisions are being made now. Former USDA chief economist Seth Meyer told Reuters that growers may alter crop choices and fertilizer application rates in response to the price spike, which raises the risk of lower yields or reduced acreage later in the season. That is how today’s supply-chain disruption can become tomorrow’s food-inflation print.

The spillovers are global rather than regional. Reuters reported that Brazil, which covered 100% of its urea needs with imports in 2025, saw 41% of those imports pass through Hormuz, while the Middle East supplies roughly 40% of global urea trade. Business coverage has also warned that nearly half of global urea and sulfur flows move through the chokepoint, making poorer food-importing economies especially vulnerable if the disruption lasts. The practical implication for investors and policymakers is that the Iran shock may yet prove more durable in supermarket inflation than in gasoline prices, because crop-input shortages transmit more slowly but can linger well after the initial oil spike fades.