Iran Closes Strait of Hormuz

-Israel joint war against Iran, has restricted the flow of oil and natural gas worldwide, plunging the global fertilizer sector into crisis. President Trump’s assault on Iran has led to the closure, with 34 percent of global urea and nearly a quarter of ammonia trading through the strait.

This disruption affects 40-50 percent of the world’s food production, which depends on artificial nitrogen-based fertilizer created by combining nitrogen from the air with hydrogen from natural gas to make ammonia, later combined with nitric acid or carbon dioxide to produce ammonium nitrate or urea.

Oil prices surged to four-year highs last week amid the conflict, while on-farm fertilizer prices have increased about 50 percent in the UK, according to Charlie Ireland, managing partner of the Essex-based farming consultancy Ceres Rural. Ireland, who appeared in the TV documentary Clarkson’s Farm, noted that the supply chain for fertilizer has been shut for several weeks already.

In the UK, arable farms have their fertilizer on-farm for the 2026 harvest, but concerns mount for 2027.

John Denton, secretary-general of the International Chamber of Commerce (ICC), which represents more than 170 countries, is working with United Nations secretary-general António Guterres to establish a safe corridor for fertilizer shipments through the Strait of Hormuz.

He added that global leaders say the Iran war has already led to the loss of 20 billion meals per week. Global urea is produced in Bahrain, Iran, Qatar, Saudi Arabia or the United Arab Emirates, with 20 percent of the world’s liquefied natural gas (LNG) also trading through the strait.

Jo Gilbertson, head of fertilizer at the UK’s Agricultural Industries Confederation (AIC), highlighted the decoupling of fertilizer and grain prices, noting that in Africa, farmers lack funds for fertilizer, potentially leading to hunger and social unrest.

In developed economies like the UK, margins are insufficient to justify higher fertilizer costs. Tom Bradshaw, president of the National Farmers’ Union, said the focus for UK arable farmers is on implications for 2027, with members delaying decisions that could result in planting lower-yielding spring crops.

Last week, the amount of wheat planted during the Australian autumn fell 14 percent. Svein Tore Holsether, chief executive of Yara International, the world’s second-biggest fertilizer producer, explained that farmers are not applying optimal fertilization, impacting next season’s crop yields.

The UK lost sovereign fertilizer capability in 2023 when US firm CF Fertilisers shut its ammonia plant in Ince, Cheshire.

The company now makes fertilizer at its last remaining works in Teesside, dependent on imports of ammonia from America. Last week, Teresa Ribera, the European Commission’s executive vice-president for a Clean, Just and Competitive Transition, announced that nations in the European bloc are free to compensate up to 70 percent of farmers’ additional costs due to increased prices of fuel and fertilizer, capped at €50,000 per beneficiary.

David Barton, a Cotswolds livestock farmer based near Cirencester, said his fertilizer price went up from £370 to £490 per tonne.

He described ordering delays due to Middle East issues, reducing his silage yield. Barton added that some livestock farmers are ordering now for next year at higher prices, uncertain if it is the right decision. Michael Klare, an emeritus professor of peace and security studies at Hampshire College and defense correspondent for The Nation magazine, stated that Iran is the fourth-leading oil producer and a fifth of world oil and natural gas leaves the Persian Gulf.

Klare noted the Trump administration’s attack on Venezuela occurred, drawing parallels to historical events. In 1951, the Iranians elected nationalist prime minister Mohammad Mosaddegh, who nationalized the British Petroleum holdings in Iran. U.S.

Conspired with the British to overthrow Mosaddegh and install the Shah in 1953-1954. The Shah ruled as a dictator for 15 years after installation, until the Iranian opposition overthrew him in 1979-1980. The ICC oversaw the Black Sea Grain Initiative to extract exports of grain from the region after Russia unleashed its invasion of Ukraine in February 2022.

54pm BST, by Oliver Gill, the Deputy Business Editor of The Sunday Times.