The longer the conflict in the Middle East continues, the greater the likelihood that people around the globe will pay more for food. And those in the most vulnerable countries could face hunger.
The Persian Gulf is a dominant source of fertilizer. Though the region is best known as a prodigious source of oil and natural gas, its abundance of energy has spurred the development of factories that make the raw materials for many types of fertilizer, especially those that deliver nitrogen.
Nitrogen fertilizers are essentially natural gas reconfigured as plant nutrients. They nourish crops that yield roughly half the world's food supply.
For now, most factories in the Gulf that make nitrogen fertilizers are continuing to produce them. But delivering their wares to farmers is suddenly impossible, given the effective shutdown of the Strait of Hormuz, the narrow channel linking the Gulf to the Indian Ocean.
The cessation of marine traffic on the strait is the primary reason that
oil and gas prices have surged. If the waterway remains off limits, prices for key fertilizers, and the chemicals used to make them, will go up. That could prompt farmers to limit their application, reducing the world's food supply while making sustenance less affordable.
"It's bad — there's no other way of putting it," said Chris Lawson, vice president of market intelligence and prices at CRU Group, a London-based research and data firm focused on commodities. "The world is highly reliant on fertilizer and associated raw materials supplied out of that region."
War has a way of exposing vulnerabilities that arise from interconnection. Four years ago, when Russia invaded Ukraine, the world gained a
wrenching lesson in the geography of agriculture. Both countries were substantial sources of wheat and other grains. Shortages of bread soon emerged from West Africa to South Asia.
Russia and Ukraine also produce significant quantities of
fertilizer. The enduring conflict made those products scarce, driving up prices and prompting farmers to
conserve their use of fertilizer. The result was depleted harvests.
The latest upheaval in the Middle East does not affect the harvesting of grain, but its impacts for fertilizer may be even more profound.
"The volumes are greater this time around, potentially, than in the Russia-Ukraine conflict," said Sarah Marlow, global editor for fertilizers at Argus Media, a news and data service focused on commodities. "You've got multiple producing countries."
