Energy, logistics and the growing connection between fertilizer security and food security

May 2026

Market Intelligence & Insights
Black Swan Global

Executive Summary

Global fertilizer markets entered May 2026 with pressure building across three interconnected layers: physical supply, production inputs and maritime logistics. The disruption of Gulf exports through the Strait of Hormuz has affected urea and phosphate fertilizers directly, while tighter natural gas and sulphur availability has increased production costs and constrained output beyond the Middle East.

The World Bank fertilizer price index rose more than 12% in the first quarter of 2026 and reached its highest level since 2022 in March. Urea was at the centre of the shock: its benchmark averaged about US$725 per metric ton in March, nearly 55% above February. The World Bank’s April outlook projected the fertilizer index to rise 31% in 2026 and urea prices by nearly 60%, subject to substantial upside risk.

The market’s vulnerability reflects concentration. In 2024, the Middle East accounted for almost one-quarter of global urea exports and more than 15% of ammonia exports. The phosphate chain is exposed as well: roughly 15% of global DAP exports, one-third of global sulphur trade and around 15% of ammonia trade pass through the Strait of Hormuz.

For importing economies, the strategic issue is therefore broader than fertilizer pricing. Higher input costs, disrupted cargo flows and reduced application rates can ultimately affect crop yields and food affordability. Fertilizer resilience is increasingly becoming part of food-security policy.

Key Market Signals

1. A Fertilizer Shock with Multiple Transmission Channels

The 2026 fertilizer shock differs from a simple shortage of finished product. It is simultaneously affecting fertilizer exports, feedstock availability, production economics and shipping.

Nitrogen fertilizers are particularly energy intensive because ammonia is produced primarily from natural gas. Phosphate fertilizers depend on a different but equally interconnected chain involving phosphate rock, ammonia and sulphur. Disruption to any one of these inputs can reduce production or raise the marginal cost of finished fertilizer.

This creates a multiplier effect: an energy shock can become a fertilizer shock, and a fertilizer shock can later become an agricultural and food-price shock.

Figure 1. Selected fertilizer market indicators for 2026. Sources: World Bank Commodity Markets Outlook, April 2026; World Bank fertilizer market update, May 2026.

2. Urea: The Most Immediate Point of Stress

Urea has been the most visibly affected major fertilizer. The Middle East is a large, low-cost production centre and a major exporter, supported by access to natural gas and established maritime infrastructure.

According to the World Bank, Middle Eastern producers accounted for almost one-quarter of global urea exports in 2024. The near-halt in regional exports following the closure of the Strait of Hormuz therefore removed a significant volume from the internationally traded market at the same time as Northern Hemisphere spring demand was strengthening.

Production constraints amplified the logistics shock. The World Bank reported interruptions to ammonia production in Iran, suspension of urea and ammonia production in Qatar following damage to facilities, and reduced urea and ammonia output in India as LNG availability declined.

Figure 2. Middle East share of global urea and ammonia exports in 2024. Source: World Bank, citing International Fertilizer Association data.

3. Natural Gas Links Energy Security to Fertilizer Security

Natural gas is not merely an energy source for the fertilizer industry; it is a principal feedstock for ammonia. The World Bank estimates that natural gas accounts for approximately 80-90% of ammonia production costs.

This means a gas-market disruption can affect fertilizer supply even in countries that are not direct importers of Gulf urea. Higher LNG and natural gas prices raise production costs in Europe and Asia, while shortages can force plants to reduce operating rates.

The consequence is a wider geographic transmission of the original shock. A disruption centred on the Gulf can tighten fertilizer availability in South Asia or Europe through both trade and production channels.

4. Phosphate Fertilizers: Exposure Beyond Urea

The phosphate market faces a different but important set of vulnerabilities. Diammonium phosphate (DAP) production depends on ammonia and sulphur in addition to phosphate rock, making it sensitive to disruptions in internationally traded feedstocks.

World Bank analysis estimates that nearly 15% of global DAP exports transit the Strait of Hormuz, together with about one-third of global sulphur trade and around 15% of ammonia trade. This creates exposure on both the finished-product and feedstock sides of the phosphate chain.

Figure 3. Approximate share of global DAP, sulphur and ammonia trade transiting the Strait of Hormuz. Source: World Bank Commodity Markets Outlook, April 2026.

This matters particularly for large phosphate producers that rely on imported sulphur or ammonia. The World Bank noted that OCP in Morocco brought forward maintenance on phosphate production during the second quarter, likely reflecting disruptions to these inputs.

5. Trade Policy Can Magnify Physical Tightness

Physical disruption is only one part of the risk. When domestic fertilizer prices rise, major producing countries may restrict exports to protect local agricultural markets. Such measures can tighten internationally available supply even when global production has not materially declined.

China remains especially important because of its scale in nitrogen and phosphate fertilizers. The World Bank noted reports of potential curbs on Chinese fertilizer exports during the second quarter of 2026, while exports in the first two months of the year remained well below levels seen earlier in the decade.

For importers, this reinforces the need to assess policy risk alongside production and freight. A diversified supplier base is less effective if several major origins simultaneously prioritize domestic availability.

6. From Fertilizer Affordability to Food Security

The most important consequence may emerge with a lag. High fertilizer prices compress farm margins and can cause farmers to reduce application rates, postpone purchases or shift toward less fertilizer-intensive crops.

The World Bank warns that sustained high fertilizer costs can reduce future crop yields and tighten food supply. The precedent is recent: during the 2021-22 fertilizer shock, nitrogen use per hectare in Sub-Saharan Africa fell materially, while potash application declined sharply in South Asia.

The 2026 shock therefore has a timing dimension. Commodity markets may stabilize before the agricultural effects are fully visible. Decisions made by farmers during planting and application windows can influence yields months later.

7. Strategic Implications for Importing Markets

01 | Diversify origin
Avoid excessive reliance on one producing region, especially for essential seasonal requirements.

02 | Secure feedstocks as well as finished fertilizer
For integrated producers, ammonia, sulphur and natural gas exposure can be as important as finished-product availability.

03 | Build procurement around crop calendars
Fertilizer is time-sensitive. A cargo delivered after the application window may have materially lower agricultural value.

04 | Maintain logistics optionality
Evaluate alternative loading regions, vessel sizes, ports, storage and inland distribution before disruptions occur.

05 | Monitor trade policy
Export restrictions and domestic-priority measures can alter available supply rapidly.

06 | Link fertilizer strategy to food security
Governments and institutional buyers should assess fertilizer availability as part of wider agricultural resilience, not as an isolated commodity purchase.

Outlook

The World Bank’s baseline assumes that the most acute Middle East supply disruptions ease around mid-2026, allowing fertilizer availability to improve later in the year. Under that scenario, prices remain elevated in 2026 before easing as trade recovers and additional capacity comes online.

The risks, however, remain asymmetric. A prolonged restriction on Hormuz shipping, further damage to production facilities, higher natural gas prices or additional export controls could keep nitrogen and phosphate markets tighter for longer.

The strategic lesson is clear: fertilizer security depends on more than securing a seller. It depends on access to diversified production, feedstocks, shipping, storage, financing and timely delivery. In a volatile market, the ability to coordinate these elements is becoming central to agricultural resilience.

Sources & Data Notes

• World Bank Group, Commodity Markets Outlook, April 2026. Data cutoff: 20 April 2026. Used for fertilizer price changes, 2026 forecasts, Middle East export shares, natural-gas cost exposure, DAP/sulphur/ammonia trade exposure and food-security transmission.
• World Bank Group, “Fertilizer prices surge as Strait of Hormuz disruptions tighten supplies,” 14 May 2026. Used as a May 2026 update confirming the fertilizer index reached its highest level since October 2022 by April and for current market context.
• International Fertilizer Association data as reproduced and discussed by the World Bank. Used for 2024 Middle East shares of global urea and ammonia exports.
• FAOSTAT and World Bank analysis as cited in the April 2026 Commodity Markets Outlook. Used for historical fertilizer-use and food-security context.

Publication Note

This publication is prepared by Black Swan Global – Market Intelligence & Insights as general market commentary. It is intended to support discussion of international energy, fertilizer and commodity-market developments and does not constitute investment, financial, legal, trading or other professional advice. Data are drawn from publicly available sources considered reliable at the time of publication. Market conditions can change rapidly.