Beyond Oil: the Strait of Hormuz and Global Food Risk

In the wake of the US and Israeli attacks on Iran’s military infrastructure, the financial press has reflexively focused on oil. Tanker traffic, Brent oil and the risk of triple-digit prices dominate the discussion.

But oil is not the only commodity that poses a serious long-term risk.

Another deep vulnerability runs through natural gas – and from there through nitrogen fertilizer. If commercial shipping through the Strait of Hormuz were significantly restricted, the impact would extend beyond fuel markets. It would reach directly global food production.

That’s because the Gulf region is not only a major energy exporter. It is one of the world’s leading suppliers of nitrogen fertilizer, the basis of modern agricultural yields.

The energy behind the food system

Nitrogen fertilizer starts with natural gas. Through the Haber-Bosch process, methane is converted into ammonia, which is then upgraded to urea and other nitrogen products. In practice, nitrogen fertilizer is natural gas that is converted into plant food.

About half of global food production depends on synthetic nitrogen. Without this, crop yields would decline sharply.

Worldwide approximately 180 million tons of nitrogenous fertilizers are consumed annually (measured in nutrient terms). Of this, roughly 55 to 60 million tons of urea moves annually via international sea trade. The Middle East accounts for approx 40% to 50% of that traded volume.

And almost all of that export has to go through the Strait of Hormuz.

In other words, nearly a quarter of the world’s traded nitrogen fertilizer – and a significant portion of total global nitrogen production – moves through the one maritime chokepoint now threatened by war.

Oil can be the artery of the global economy. Nitrogen fertilizers play a central role in the global food chain.

A highly concentrated export base

The production scale behind Hormuz is significant:

• Qatar exports approximately 5.5 to 6 million tons of urea and ammonia annually from its QAFCO complex.
• Iran exports about 5 million tons of urea per year, which represents about 10% of global trade.
• Saudi Arabia contributes approximately 4 to 5 million tons annually through SABIC and related producers.
• Oman and the UAE together add several million tons.

Collectively more than 15 million tons of annual export capacity is in the Gulf. If you broaden the lens to include ammonia and related nitrogen products, exposure increases further.

Unlike oil, fertilizer markets lack a meaningful strategic buffer. The United States maintains a strategic petroleum reserve containing hundreds of millions of barrels of crude oil. There is no equivalent stock of nitrogen fertilizer ready to compensate for a long-term disturbance.

The trade in fertilizers largely takes place on a just-in-time basis. Seasonal peaks in demand correspond to planting cycles, and inventories are not built up to withstand major geopolitical shocks.

Why timing increases risk

Agriculture is determined by biology and weather.

In the Northern Hemisphere, fertilizer purchasing is accelerating ahead of spring planting. If shipments are delayed during that period, farmers are faced with difficult choices: reduce nitrogen dosage, switch crops or accept higher costs.

Lower nitrogen application usually translates into lower yields. Even modest reductions in doses could reduce production of corn, wheat and rice – the staples that anchor the global calorie supply.

The world saw a version of this dynamic in 2022, after Russia’s invasion of Ukraine. Fertilizer prices rose enormouslyand farmers in several regions have scaled back use in response. Yields proved resilient in some areas, but the episode underscored how sensitive food systems are to the availability and pricing of fertilizer.

Replacing 10 to 20 million tons of annual export capacity from the Gulf would not be easy. It takes years for new ammonia plants to be licensed and built. Existing facilities outside the region are typically operating at near maximum capacity. The incremental supply cannot simply be switched on in the middle of the planting season.

The global exposure runs deep

Dependence on nitrogen from the Gulf is widespread.

India is heavily dependent on imported LNG – largely from Qatar – to fuel its domestic urea production. If gas flows are interrupted, India’s fertilizer production will decline just as planting cycles are approaching.

Brazil, one of the world’s largest agricultural exporters, imports significant amounts of urea from the Middle East. Soybean and corn production in regions like Mato Grosso depends on consistent supplies of fertilizer. Any sustained disruption would quickly tighten global grain balances.

The United States is a major producer of fertilizer, but it is not isolated. A significant portion of U.S. urea imports pass through Hormuz. Domestic producers cannot quickly add millions of tons of new supply to replace disrupted imports.

This is not a regional supply problem. It is a structural vulnerability embedded in the global agricultural system.

The overlooked transmission channel

Oil price spikes are immediate and visible. Gasoline prices are adjusted in real time and financial markets respond within minutes.

Fertilization disruptions occur on a slower, but potentially more consequential, timeline. Reduced nitrogen availability today could translate into lower crop yields months later. This is ultimately reflected in tighter supplies, higher feed costs and higher food prices.

Modern agriculture is essentially an energy conversion system: natural gas becomes ammonia; ammonia becomes nitrogen fertilizer; fertilizer becomes calories.

If the Strait of Hormuz faces continued disruption, the most important price to watch may not be Brent crude. It could be urea benchmarks and ammonia export streams.

Energy security and food security are intertwined. When a single bottleneck handles much of the trade in both oil and nitrogen fertilizer, the consequences extend far beyond the fuel market.

The headlines could focus on tankers and crude oil prices. The more sustainable story could unfold in the food supply.