The reopening of the Hormuz Strait is in sight: priority for oil and gas transportation, while the transportation of one million tons of fertilizers still needs to be cleared.

Notice that, although the United States and Iran have reached a temporary agreement to end their months-long war and potentially reopen the Strait of Hormuz, this is unlikely to immediately ease the transport of fertilizers as ship owners are still waiting for more details to assess the safety of passage. As a key channel for global commodity trade, the Strait of Hormuz has effectively been closed since the first round of attacks on Iran at the end of February. Market observers expect that even if trade in the region resumes, the recovery of fertilizer transport will be a gradual process, as hundreds of ships carrying various goods detained in the region will have to compete for passage. The Gulf region is home to some of the largest fertilizer plants globally, with the strait previously accounting for about a third of global urea trade volume - urea being one of the most important crop nutrients worldwide. The interruption in transport over the past months has resulted in a large amount of urea and other fertilizer products being trapped in the strait, stranded on ships unable or unwilling to pass through. According to tanker tracking data compiled by Kpler, there are currently over 40 ships loaded with fertilizer in the strait. Kpler's data shows that, since the conflict began, though a very small number of ships have managed to exit, the weekly export volume has plummeted by 90% from nearly 600,000 tons per week in late February to 60,000 tons per week in early June. Significant decrease in the amount of fertilizers exported through Hormuz Moreover, fertilizer goods are unlikely to be among the first goods allowed to pass. The Strait of Hormuz is crucial for global energy flows, with analysts predicting that crude oil and liquefied natural gas (LNG) tankers will be given priority passage. Alexis Ellenrd, Senior Dry Bulk Manager at Kpler, said, "When it comes to sorting out ship traffic through the Strait of Hormuz, as soon as traffic starts to normalize, oil tankers and LNG carriers will inevitably be at the top of the list," "Fertilizers are not a high priority." Despite ongoing transport delays, much of the risk premium in the fertilizer market due to the Iran war has dissipated. Since China relaxed export restrictions in mid-April and the planting season in most of the Northern Hemisphere has ended, urea prices have dropped by over 30%. However, fertilizer prices in the United States are still 10% higher compared to the same period last year. According to Pranchi Goyal, Senior Analyst at the UK-based commodity research firm CRU, there are approximately 1 million tons of fertilizer on the ships stranded in the Gulf region. Around 40% of this is destined for India, but once passage is restored, the remaining share may flood back into the market, potentially putting further downward pressure on prices.