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The conflict in Iran is disrupting fertiliser production and exports in the Middle East, tightening global supplies and raising fears of higher food prices, industry executives and analysts have warned.

The Middle East is one of the world’s largest fertiliser producers, while the Strait of Hormuz is a crucial shipping route for exports. About 35 per cent of global urea exports pass through the waterway, according to CRU data. Urea is the most widely used nitrogen fertiliser, which in turn underpins around half of global food production.

The route also handles 45 per cent of global sulphur exports, a key ingredient used to produce phosphate fertilisers, as well as significant volumes of ammonia, a key ingredient for nitrogen fertilisers.

“We shouldn’t underestimate what this potentially could mean for global food production,” said Svein Tore Holsether, chief executive of Europe’s largest fertiliser group Yara.

He added that the focus on oil and gas was “overshadowing” the impact on the fertiliser industry. “If you’re not getting [fertiliser] into the field of the farmers, yields could go down by up to 50 per cent in the first harvest,” he said.

If the disruption continues, consumers could see higher prices for bread within six to 10 weeks, eggs within a few months and pork and broiler chicken within six months, estimates Raj Patel, food system expert at the Lyndon B. Johnson School of Public Affairs. 

Fertiliser prices have already jumped sharply. Granular urea prices in the Middle East have risen by about $130 to around $575-650 a tonne since Friday, while Egyptian export prices have climbed by around $125 to around $610-625 a tonne over the same period, according to Argus.

European ammonia futures have also surged, with a 1,000 tonne April cargo trading at $725 a tonne — about $130 higher than when the contract last traded in mid-February.

Analysts say the disruption could prove even more damaging than the food shock triggered by Russia’s invasion of Ukraine in 2022, when energy and fertiliser costs surged and global food prices hit record highs.

“When prices spiked in 2022 it was extraordinary, but the market was able to adjust because Russian exports continued,” said Chris Lawson, head of fertilisers at CRU, adding that the “big difference” this time was that a blocked Strait of Hormuz was a physical barrier.

The impact on food in 2022 was more immediate because Ukraine was a major wheat exporter, said Patel, but “this time around the impact will be far more widespread”.

The disruption is already affecting production. QatarEnergy, which exported 5.4mn tonnes of urea or close to 10 per cent of global seaborne trade last year, said on Monday it had halted sulphur, ammonia and urea output at its Ras Laffan complex following a drone attack on the site a day earlier. 

Iran had taken all of its ammonia production offline because of the conflict, while producers elsewhere in the region were considering cutting output as vessels are unable to pass through the Strait of Hormuz, said Sarah Marlow, global head of fertiliser pricing at Argus.

Energy prices are also adding pressure. Natural gas is the key feedstock used to produce nitrogen fertilisers such as ammonia and urea, meaning surging gas prices can rapidly raise production costs.

Holsether said the price of gas used by Yara to produce fertiliser in Europe had doubled from $10.6 per mmbtu on Friday to more than $20 by Monday. 

The disruption is hitting at a particularly sensitive moment for farmers. In parts of Europe and the northern hemisphere, growers are entering the spring fertiliser application season, when they purchase and spread nutrients that determine crop yields later in the year.

“What I’m worried about is, like what we saw in 2022, that it’s the most vulnerable that pay the highest price,” said Holsether. “We saw what that meant — hunger and famine in many parts of the world.”