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The US-Iran conflict has severely disrupted the Gulf fertilizer market, with the Strait of Hormuz closure and production outages causing global supply chain bottlenecks. The Middle East supplies over 40% of seaborne urea and 30% of ammonia, leading to a 65% surge in urea prices and significant gains in ammonia and DAP prices since early March 2026. Analysts attribute the price spike to dual pressures from halted production and logistics disruptions, with solid fertilizers outperforming liquids in exports.
This disruption threatens global food security and inflation, as fertilizers are critical inputs for agriculture. Traders and investors face heightened volatility in commodity markets, with earnings diverging between firms benefiting from higher prices versus those suffering from reduced volumes. The situation underscores the geopolitical risks embedded in energy and trade routes, particularly for regions reliant on Middle Eastern exports.
Markets should monitor the duration of the conflict, potential sanctions, and production recovery timelines. For Gulf investors, the crisis highlights vulnerabilities in regional supply chains and the need for diversification. Key assets to watch include urea, ammonia, and DAP, with price trends likely to remain sensitive to geopolitical developments.
