The conflict in the Middle East is having serious repercussions on the international fertilizer trade, with potential consequences for agricultural production and global food security. This is the alarm raised by the World Trade Organization (WTO), which in a new report highlights how tensions in the Gulf region have disrupted one of the sector's key supply routes.
According to the WTO, many countries in Africa and Asia are particularly exposed to the risks posed by reduced supplies and rising fertilizer prices. Reduced availability of these products could reduce agricultural yields, with knock-on effects on food supply and international price trends.
The most critical element concerns the Strait of Hormuz, a strategic passage for world trade. The report highlights that fertilizer shipments across the Persian Gulf virtually stopped after the conflict began, remaining at near-zero levels since then.
The disruption in flows had an immediate impact on prices. The price of urea, which had been hovering around $400 per ton, rose above $850 in April, before falling back to $453 in June. Diammonium phosphate (DAP) also saw a sharp increase, rising from around $580 to $770 per ton.
Despite the rise, prices remain below the highs reached in 2022 following the outbreak of the war in Ukraine, when urea exceeded $900 per tonne, DAP touched $960, and potash exceeded $1.200.
The WTO also emphasizes that the global fertilizer market is highly concentrated in a few exporting countries. The Gulf economies account for nearly 25% of global nitrogen fertilizer exports and 11,4% of phosphate fertilizer exports, while they play no significant role in the potash market.
Asia is the main destination market, accounting for 40% of the Gulf's nitrogen fertilizer exports and nearly half of its phosphate exports. Other major suppliers include Russia, China, and Morocco.
India is among the countries most dependent on supplies from the Gulf, accounting for nearly two-thirds of its nitrogen fertilizer imports. Thailand also sources about half of its needs from the same region. Other major destination markets include Australia, Brazil, Morocco, and the United States.
The report identifies a total of 18 economies as particularly vulnerable to disruptions in nitrogen fertilizer supplies, including Kenya, South Africa, Zimbabwe, Brazil and Sri Lanka.
The situation is also being exacerbated by trade restrictions introduced after the closure of the Strait of Hormuz, such as export licenses, limitations, and bans, which could affect up to 15% of global fertilizer exports. This share could rise to 23,3% if the closure of the Strait were deemed equivalent to a complete ban on exports from the Gulf countries. The Organization, however, notes that the actual drop in exports could be smaller, as the introduction of licenses does not necessarily equate to a complete export ban.
According to the WTO, reopening the Strait of Hormuz would help reduce trade tensions and restore greater stability to international markets. The organization also calls on governments to develop policies that take into account the particular vulnerability of developing economies, especially in Asia and Africa, which are more exposed to the effects of the fertilizer crisis and, consequently, food security.
