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Everyone has been watching oil. Brent, WTI, TTF — the big benchmarks that move in real time and land on front pages. What has moved with less noise but equal consequence is the fertilizer market, and it is now entering its most dangerous phase. FOB granular urea in Egypt, a bellwether for global nitrogen pricing, jumped to around $700 per metric ton from $400 to $490 before the war, per analysts cited by CNBC on March 25. Ammonia surged roughly 24 percent to near $600 per tonne, per Anadolu Agency. The Strait of Hormuz carries around a third of all globally traded urea according to the United Nations, a quarter of all traded ammonia, and close to half of all traded sulphur. None of that is moving normally. And with the Islamabad talks having collapsed on Sunday without a deal, none of it is going to move normally anytime soon.
Why Fertilizer and Energy Are the Same Problem
Natural gas accounts for roughly 70 to 80 percent of the variable cost of producing nitrogen fertilizers, per multiple industry sources including Euronews and Anadolu Agency. That single fact means that the TTF shock and the fertilizer shock are not two separate crises. They are one crisis running through two different pipelines into the European economy. When TTF rose from around €32 per megawatt-hour in late February to nearly €52 within weeks of the Hormuz closure, per Euronews data, European nitrogen fertilizer producers faced an immediate input cost spiral. Facilities that were already operating below normal capacity because of elevated post-Ukraine gas prices were pushed further into the red.
Sarah Marlow, global head of fertilizer pricing at Argus, laid out the numbers in a video call with CNBC on March 25:
“Almost 50% of all globally traded sulphur comes from that region. For urea, it’s around a third of all globally traded urea that comes from that region and for ammonia, it’s close to 25%. So, it’s huge. It’s very significant — and more significant in some ways than the impact of Ukraine because it is affecting multiple producers. You’re not just talking about one or two.”
Sarah Marlow, Global Head of Fertilizer Pricing, Argus, CNBC, March 25, 2026
Ukraine in 2022 knocked out one major supplier. Hormuz in 2026 has knocked out Saudi Arabia, Kuwait, Qatar, the UAE, Iran and Bahrain simultaneously. Chris Lawson, vice president of market intelligence and prices at CRU Group, added the trade flow dimension to CNBC: “There’s a lot of traded supply that is at risk. Thirty percent of global urea trade comes out of Iran and the Hormuz-constrained countries. If farmers aren’t able to get the urea that they need, crop yields will inevitably go lower.” Oxford Economics’ Alpine Macro, in a note cited by multiple outlets on March 24, estimated that urea and ammonia prices had surged by around 50 percent and 20 percent respectively since the war began. Fitch Ratings responded to the disruption by raising its 2026 ammonia and urea price expectations by approximately 25 percent, warning that a prolonged Hormuz closure could push them higher still, per Anadolu Agency.
The Spring Planting Window Is Not Waiting for a Ceasefire
The particular cruelty of this crisis is its timing. European farmers are in the middle of the Northern Hemisphere spring planting season right now. Nitrogen fertilizers are not a discretionary input. You cannot defer them to next quarter the way a manufacturer defers a capital purchase. If you do not apply nitrogen to your cereal crops during the right window, your yield falls. There is no catching up in July.
In several German federal states, prices for important nitrogen fertilizers had already risen significantly within weeks of the Hormuz closure, per Euronews. Paul Henschke, a farmer in Saxony-Anhalt quoted by Euronews, captures the ground-level arithmetic: he receives €176 for a tonne of bread wheat but now pays more than three times that for a tonne of fertilizer. That ratio — revenue versus input cost — is not a business. It is a transfer from farmer to supplier, with food price inflation as the eventual recipient.
The current spring shock is not yet comparable to the extreme values of the 2022 energy crisis, when urea briefly exceeded €1,000 per tonne, per Euronews. Current supply for the immediate season is largely secured. The problem, as German retailers and hauliers describe it, is logistics rather than absolute scarcity. But that distinction has an expiry date. Australia’s urea stockpile was projected to run out by mid-April, per Anadolu Agency, with the country sourcing over 60 percent of its urea from the Middle East. What Australia faces in April, Europe faces in the autumn restocking cycle if the disruption runs through summer.
Carl Skau, deputy executive director of the World Food Programme, put the planting-season timing problem starkly in AP reporting: “In the worst case, this means lower yields and crop failures next season. In the best case, higher input costs will be included in food prices next year.”
QatarEnergy Stopped Producing Urea Too
One detail that has been underreported in the oil-focused coverage is that QatarEnergy’s decision to halt LNG production after the March 2 strikes did not just remove gas from the market. Qatar is a major downstream nitrogen fertilizer producer, and QatarEnergy announced it would also stop urea production following the LNG halt, per CNBC. Qatar accounts for a meaningful share of globally traded urea, and its exit from the market came at precisely the moment European buyers needed alternative supply most urgently.
China compounded the problem by imposing export restrictions on fertilizers to protect its domestic market, per Reuters reporting cited by CNBC. China had relied on the Middle East for roughly half of its sulphur imports. When that supply was disrupted, Beijing’s response was to preserve its own inventory rather than redirect exports to compensate for the Gulf outage. The two largest alternative sources of fertilizer for European buyers — the Gulf and China — disappeared simultaneously.
The European Commission proposed temporarily suspending general import tariffs on fertilizers from North Africa and the United States in February 2026, per Euronews, as an emergency measure to accelerate alternative sourcing. But the EU’s Carbon Border Adjustment Mechanism, which took full effect on January 1, 2026, simultaneously makes imports from countries without carbon pricing more expensive. Yara International, the Oslo-listed fertilizer giant with extensive blending operations in Europe, faces both the Gulf supply disruption and the CBAM cost increase at the same time. European equity markets had already priced in eight percent of losses over five weeks of the supply shock — but the fertilizer transmission into food price inflation has not yet fully reached any index.
The Sulphur Dimension
Sulphur is the least-discussed element of this crisis and potentially the most structurally damaging. It is an essential nutrient for crops and, critically, a required raw material in the production of sulphuric acid, which is needed to convert phosphate rock into plant-available phosphate fertilizers. In other words, a sulphur disruption does not just affect sulphur trade. It affects the entire phosphate fertilizer production chain globally.
Around 45 to 50 percent of globally traded sulphur passes through the Strait of Hormuz, per Argus data cited by CNBC and confirmed by Wikipedia’s economic impact analysis of the Iran war. Sulphur prices had already peaked in January before the conflict began, Marlow noted. The Hormuz closure removed more production from an already stressed market. Saudi Arabia produces about a fifth of the world’s phosphate fertilizer, and the region as a whole exports more than 40 percent of global sulphur, per Chris Lawson at CRU Group via AP. A sustained blockade following the Islamabad collapse means sulphur tightness is locked in for the growing season.
What European Farmers Actually Do Next
The market is beginning to see a crop substitution effect that will influence food prices for the rest of 2026. In the United States, per FinancialContent reporting of USDA Prospective Plantings data from March 31, farmers facing nitrogen production costs of approximately $166 per acre for corn began shifting toward soybeans, which fix their own nitrogen. The “soybean pivot” reduces corn area planted and, with a lag of months, reduces corn supply and tightens prices globally.
European farmers do not have the same flexibility. The nitrogen-dependent cereals that dominate northern and eastern European farmland do not have an easy soybean equivalent. The more likely European response is reduced application rates, which translates directly into lower yields per hectare in the autumn harvest. Carl Skau’s “higher input costs will be included in food prices next year” framing is the baseline, not the downside scenario.
The food inflation that Europe is going to see from the fertilizer channel is different in its timing from the energy price inflation already in the CPI data. The March CPI print captured the first month of the direct energy shock. The fertilizer shock transmits into food prices on a four to nine month lag as crop yields fall and supermarket contracts re-price. That wave hits consumer prices in Q3 and Q4. It is not yet in any inflation forecast that was written before Islamabad fell apart on Sunday.
The Levels and What Drives Them Now
FOB Egypt urea at around $700 per tonne is the current reference, versus a pre-war range of $400 to $490. If Hormuz normalises and Qatari production restarts, the market has a plausible path back toward $500 over months. But the physical constraint does not care about diplomacy on the timescale that matters for planting. The ceasefire that briefly sent Brent down 16 percent produced no physical reopening of the strait — it was a supervised pause that the Islamabad collapse has ended. Every week of continued disruption is another week of the spring application window closing without adequate nitrogen reaching European fields.
Watch TTF as the leading indicator. The 20 percent TTF crash on ceasefire day never reflected a real change in physical gas supply, and now that the ceasefire framework has collapsed, the floor under European gas prices is higher than before the brief relief. When TTF moves, nitrogen fertilizer production economics move with it within weeks. That is the transmission mechanism connecting Sunday’s Islamabad press conference to the price of bread in European supermarkets in October.
