Iran War Claims Fresh Victims: Farmers!
Jakarta, CNBC Indonesia — The escalating conflict in the Middle East is beginning to shake the global fertiliser supply chain. Its impact is rippling from South Asia to North America just as planting season begins in the northern hemisphere.
Energy disruptions, obstructed shipping routes, and the closure of several production facilities are driving fertiliser prices higher and raising the risk of supply shortages for global agriculture.
The initial pressure is evident in Bangladesh. According to Reuters, the government closed four of five fertiliser plants due to worsening gas shortages. Some state-owned facilities, including Chittagong Urea Fertilizer Limited (CUFL) and Karnaphuli Fertilizer Company Limited (Kafco), ceased production after gas supplies were drastically reduced. Before closure, the two plants received around 70-80 million cubic feet of gas per day.
CUFL itself has production capacity of about 1,100 tonnes of urea and 800 tonnes of ammonia per day, with gas requirements of 48-52 million cubic feet for full operation.
The energy crisis is directly linked to the escalation of the Middle East conflict. LNG production in Qatar had paused, while tensions involving Iran disrupted the flow of oil and gas through the Hormuz Strait.
The strait, roughly 39 kilometres wide, is one of the bottlenecks of global energy trade. Many countries rely on LNG imports, including Bangladesh, which has begun to tender for two LNG cargoes scheduled to arrive in mid-March 2026 to cover the supply gap.
Implications for the Global Fertiliser Market
Disruptions through the Hormuz route carry major implications for the global fertiliser market. The Globe and Mail reported that around 30% of world urea trade passes through this corridor.
Additionally, around a third of global LNG exports and 20% of ammonia trade also transit the area. The same route transports about 22% of phosphate fertiliser exports and 45% of sulphur trade, key raw materials for phosphate production. Any disruption on this route directly affects fertiliser production and distribution across regions.
The fertiliser market has begun to react. Urea prices have risen by about 27%, ammonia by 16%, phosphates by 6%, and sulphur by 7%.
In some US importing markets, fertiliser prices surged from around US$516 per tonne to about US$683 per tonne in a short period. The rise comes as farmers prepare for the spring planting season, a period when fertiliser demand typically peaks.
Geopolitical tensions are also weighing on production. Iran accounts for around 10-12% of global urea exports. Israel supplies natural gas to Egypt, a country that produces almost 10% of global urea.
When a state of emergency is declared in Israel, gas fields are usually shut in, thereby disrupting supply to Egypt. At the same time, large urea production facilities in Qatar are affected after gas supplies to those plants are cut.
The disruptions compress supply of fertilisers that was already tight. Europe cut production after losing cheap gas from Russia. China restricted fertiliser exports to safeguard domestic supplies. Against this backdrop, the new Middle East conflict compounds the situation given that many major nitrogen and phosphate fertiliser producers are located in the Gulf.
Fertiliser price rises come as prices for major agricultural commodities are weak. Corn, soybeans, wheat, and canola face price pressure after the bumper harvest in 2025. This tightens farmers’ margins. In the United States, farm bankruptcies in 2025 were 46% higher than in the previous year, with production costs, notably fertilisers, a major factor.
Some farmers are adjusting production strategies. Nitrogen is the main plant nutrient and difficult to substitute, so purchases are still necessary. Reductions are more likely for other fertilisers such as potash.
Canada produces more than 30% of the world’s potash through around 10 mines in Saskatchewan. But demand may weaken as farmers prioritise budget for nitrogen fertilisers essential to crop yields.
If fertiliser prices continue to rise, the impact could spread to global food production. Farmers may cut fertiliser use or switch to more nutrient-efficient crops.
Soils that are depleted of nutrients gradually lose productivity. Soil fertility decline eventually suppresses yields and tighten food supplies.
This risk means the fertiliser crisis could become a global issue. Asia is among the most vulnerable regions due to heavy reliance on imported feedstocks. India imports around 40% of its urea and phosphate fertiliser from the Middle East, while Indonesia relies on that region for around 70% of its sulphur supply. If energy and logistics disruptions persist, pressure on food production costs in Asia could rise in the coming months.
CNBC Indonesia Research