Noah Gordon and Lucy Corthell write:

The Gulf region is a key producer not only of liquified natural gas (LNG) and oil products but also of fertilizer. About one-third of global seaborne trade in fertilizers typically passes through the Strait of Hormuz, which has been nearly entirely closed since the United States and Israel attacked Iran on February 28. In particular, Gulf countries are important producers of nitrogen fertilizers, which depend primarily on natural gas burned at high pressure in the presence of hydrogen to synthesize ammonia. (The hydrogen usually comes from natural gas as well.)

But it’s not just that Gulf fertilizer can’t make it to export markets such as Sudan, Brazil, or Sri Lanka. It’s also that fertilizer producers elsewhere lack key ingredients. This is where the second-order effects of a supply chain crisis appear, just as they did during Russia’s invasion of Ukraine in 2022, which sent fertilizer prices soaring.

Deprived of their natural gas supplies from Qatar, fertilizer firms in India, Bangladesh, and Pakistan have had to shut down production. Egypt, another important producer, has lost its gas imports from Israel and must turn to the ever-pricier LNG market. The benchmark price of urea, the most widely traded fertilizer, is up about 30 percent in the last month. [Continue reading…]