Amid fruitless negotiations in Islamabad, oil—both physical and futures—stubbornly continues to climb to new price levels, forgotten since the COVID-19 era, while a new shortage has already begun to take shape on the global stage. Western media express intense concern, as six weeks of fighting have already placed a "time bomb" under the global food market.
The Hormuz blockade and the hidden blow
Norway's Rystad Energy calculates that, as a result of the ongoing blockade of the Strait of Hormuz, a significant portion of agricultural nitrogen fertilizers has been prevented from reaching the global market. This corresponds to 15% of global ammonia exports (approximately 1.5 million tons) and 21% of urea exports (approximately 10 million tons). Both types of fertilizers are produced through the chemical processing of natural gas, which, alongside oil, is particularly abundant in the Persian Gulf countries—nations that now find themselves inside an invisible but essentially impenetrable "bubble."
The importance of ammonia and urea
The Persian Gulf producers
While the media focused on the energy crisis, a critical channel for fertilizer exports was closing almost silently. Among the largest ammonia producers in the Persian Gulf are Saudi Arabia—via SABIC, which also operates in polyethylene, plastics, and steel—as well as Qatar's QAFCO, which produces up to four million tons of ammonia and five and a half million tons of urea annually. In the same group belongs OMIFCO, a production holding company owned equally by the Qatari monarchy and India. Regarding urea, the regional trio of Iran, Qatar, and Saudi Arabia represented just a year ago 36% of the global export trade.
Who buys – The critical dependence
However, production figures alone do not fully capture the reality. Equally critical is the distribution of imports. India, along with South Korea and Morocco, buys ammonia from the Middle East in large quantities. At the same time, it constitutes the largest importer of urea worldwide, with Australia and Thailand following. New Delhi is systematically developing high-tech sectors; however, with a population approaching 1.5 billion, the country depends on a strong agricultural sector for the survival of its population. India ranks last among the ten largest exporters of agricultural products, with exports of about $50 billion—approximately one-fourth of the exports of the United States. This low position is explained by the massive domestic demand, as the majority of production is consumed internally. Nevertheless, India exports significant quantities of food to the US, such as rice, seafood, meat, spices, tea, coffee, and sugar worth over $1.5 billion.
The vicious cycle of trade
The cycle is completed when considering that Indian food is purchased by the same countries that supply fertilizers: the United Arab Emirates, Saudi Arabia, and Iraq. This interdependence creates a fragile system where a break in one link of the chain causes ripple effects on a global scale.
Double blow: Energy and food
It is now clear that the blockade of the Strait of Hormuz already has a double negative impact. Over 400 million barrels of crude oil and petroleum products have not reached international markets. This shortage leads to a continuous increase in prices, as importing countries and traders rush to secure available fuel at any price. Simultaneously, the reduced availability of nitrogen fertilizers—essential for modern agriculture—is expected to create a "cocoon" of protection among major producers. These countries may restrict their exports, maintaining stocks for domestic use and dramatically increasing prices.
Who will withstand the crisis
The countries that will best withstand the upcoming crisis are those that possess both fertilizer production and a strong agricultural sector. The United States, with a production of 53 million tons of fertilizers annually, is in an advantageous position. Similarly, Russia and India produce 48.1 and 48.7 million tons respectively. Conversely, other regions, such as the European Union, which is among the largest importers of fertilizers worldwide, will face severe pressures if the crisis is prolonged.
The specter of a global food crisis
The outlook is grim. If the crisis in the Middle East continues, countries will be forced to restrict their consumption and imports. Literally, the abundance of food risks turning into an expensive commodity, with prices skyrocketing and access becoming limited. Yet another unexpected global shortage is no longer a scenario—but a reality that is already beginning to take shape.
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