Fertiliser Shock Could Have Far Reaching Impact Than Oil Crisis Due To War In Middle East

Amid the noise of a looming energy crisis due to the United States-Israel-Iran war in West Asia, another risk is propping up with the potential to create food shortage and a spike in inflation.

Apart from oil and gas, the West Asian region is also crucial for maintaining supplies of fertilisers to the world.

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Countries such as Saudi Arabia, Qatar, Oman and the United Arab Emirates are major exporters of urea, sulphur and ammonia. Iran, the country at the centre of the war, is the third largest producer of ammonia.

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Important for maintaining soil health, an extended disruption in the supply of fertilisers could derail the planting cycle of farmers as they enter a critical planting season.

According to some estimates, India requires about two million tonnes of various fertilisers every month from overseas.

All eyes are currently stuck on oil prices, which have soared over 35 percent since the start of the war to breach the $90 per barrel mark for the first time since April 2024.

This quick surge has emanated from the closure of the Strait of Hormuz, the narrow but strategically important water passage through Iran and Oman.

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While the strait used to give way to about 20 percent of the world’s oil exports, it also handles almost a third of the world’s fertiliser trade.

According to a report by Bloomberg, farmers around the world are wary of the situation and are rushing to secure supply of fertilisers, anticipating the war stretching into months, if not years. According to the report, farmers in the northern hemisphere are entering the spring fertiliser application season, when demand peaks.

If fertiliser supplies could not meet their demand, there could be an impact on crop yield. According to experts, more than just quantity, this would also impact the quality of the yield.

According to a report by Reuters, Russia could be the go-to option to secure fertiliser supplies. It is the world’s largest fertiliser exporter. However, sanctions and domestic supply obligations may limit the country from meeting the demand in full.

Hence, the world may need to seek the resolution of the war instead of alternatives to commodities.

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