Some 20 per cent of the world’s oil and liquefied natural gas also transits the Strait, and its near closure, combined with missile and drone strikes across the Gulf, have forced regional energy facilities to halt output.

That has, in turn, shut fertilizer plants in the Gulf and beyond, just as farmers across the Northern Hemisphere prepare for spring planting, leaving little margin for delays.

The global market for urea was already struggling with tight supplies prior to the current conflict, with Europe forced to cut output due to the loss of cheap Russian gas and China restricting fertilizer exports, including urea, in order to ensure domestic supplies.

Which fertilizer plants have halted or cut output?

Qatar Energy has halted output at the world’s largest urea plant after shutting down gas output following attacks on its LNG facilities.

In India, a massive global urea market, three urea plants have cut output as LNG supplies from Qatar have plummeted.

India, home to nearly a fifth of the world’s population, buys more than 40 per cent of its urea and phosphatic fertilizers from the Middle East, and recently agreed to buy 1.3 million tons of urea, some of which might not arrive on time.

Bangladesh has shut four of its five fertilizer factories, while Australia’s Wesfarmers has warned of possible shipment delays, including for urea.

Egypt, which supplies eight per cent of globally traded urea, could struggle to produce nitrogen fertilizer after Israel declared force majeure on gas exports to the country, Scotiabank and Rabobank analysts say.

Brazil is almost 100 per cent reliant on urea imports — nearly half of which transits the Strait of Hormuz.

In the U.S., farmers are reporting sold out retailers, with the country about 25 per cent short of fertilizer supplies for this time of year.

Globally, urea exports are set to fall to about 1.5 million metric tons in March, compared to 3.5 million without China’s supplies, or 4.5 to 5 million with China, according to Scotiabank.

How has the conflict affected prices?

Urea export prices in the Middle East have jumped about 40 per cent to just above $700 per metric ton (C$958) on March 13 from just under $500 (C$685) before the war, according to Argus.

In the U.S., fertilizer prices have surged as much as 32 per cent since the conflict began.

Analysts say prices for nitrogen-based fertilizers like urea could roughly double if the war drags on.

Given the Middle East’s dominant market share, no producer can quickly make up for the lost supply, according to Chris Lawson, analyst at CRU.

Russia, the world’s largest fertilizer exporter, is facing supply disruptions due to Ukraine drone strikes, while China, despite ample capacity, is restricting exports, he said.

— Additional reporting by Gus Trompiz, Sybille de La Hamaide and Dewi Kurniawati

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K+S produces around 8 million tonnes of potash products yearly, exporting about 300,000 tonnes to the United States mainly from Canada. Potash is primarily used in fertilizers.

“The tariffs will be passed on one-to-one to costs, meaning the American farmer will ultimately foot the bill,” CEO Burkhard Lohr said in a press conference.

“If this becomes a sustained issue, we have the option to serve the U.S. market from Germany at lower costs, as there are currently no tariffs on European potash deliveries,” he added.

Why it matters: Agricultural inputs like potash and phosphate have become leverage points in the ongoing trade war with the U.S.

Shares of the potash and salt miner were down around 5 per cent as of 10:25 GMT, cutting into their year-to-date gains that stood at 35 per cent as of Wednesday’s close.

Warburg Research analyst Oliver Schwarz said those gains were based on more positive “buy-side” expectations that had counted on a continued strong earnings boost from higher potash prices, which were dampened by the broadly stable outlook.

After a period of volatility caused by Russia’s invasion of Ukraine that shrank margins at potash miners, potash prices began to stabilize in 2024.

Since December, they have been on an upward trend, rising around $5 every week or two, K+S said.

It forecast earnings before interest, taxes, depreciation and amortization (EBITDA) of 500 million to 620 million euros (C$781.8 million and $C969.4 million) in 2025, compared with 557.7 million last year.

At its midpoint of 560 million euros, the outlook is above analysts’ average estimate of 537.5 million in a Vara poll, but the buy-side had expected more, Schwarz said.

K+S topped market expectations for 2024 core earnings, in contrast to North American rivals Mosaic and Nutrien whose results missed them due to lower sales.

Lohr said the company expected the positive potash price trend to continue, helped by strong demand from markets like China which is tapping into its strategic reserves to meet agricultural needs.

(1 euro = C$1.56)

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