The war in Iran has done more than disrupt global hydrocarbon markets—it has quietly set off a crisis in the fertilizers derived from natural gas that feed the world.
The virtual standstill in marine traffic through the Strait of Hormuz has also taken 50 percent of the world’s traded sulfur and 36 percent of the world’s traded urea off the market, all essential components of fertilizers that sustain global food production. The result is a cascading supply crisis—spanning natural gas, ammonia, urea, sulfur, and phosphates—that threatens food security worldwide and that the United States has a limited but real window to address.
For now, US farmers are not looking at fertilizer shortages like farmers in India, Pakistan, Bangladesh, Brazil, and Ethiopia, but global conditions are pushing fertilizer prices higher at home. Fertilizer companies are already facing criticism for rising prices, but the challenge cannot be addressed by assigning blame for supply disruptions rooted in geopolitics.
Even if the Iran crisis is resolved in the next few weeks, fertilizer prices are likely to remain elevated through 2026, when farmers purchase fertilizer supplies for the 2027 planting season. This provides policymakers and government officials with a window of time to implement policies to incentivize domestic production of natural gas and natural gas-derived ammonia, urea, and sulfur, along with policies aimed at cutting transportation costs of these inputs to production facilities.
What are the global supply shocks triggering a fertilizer crisis?
The disruptions begin upstream, with the natural gas that makes fertilizer production possible in the first place.
Natural gas is essential for producing fertilizers. It is used as the primary energy source for making ammonia. Ammonia is a necessary component for all nitrogen-based fertilizers. Globally traded liquefied natural gas (LNG) supplies have been cut by 10 percent, immediately impacting fertilizer production in countries that relied on Qatar for natural gas, such as India and Pakistan. This has resulted in an overall increase in production costs. Natural gas prices in the United States have remained relatively constant because domestic production meets most of domestic demand, but the United States imports about 14 percent of its anhydrous ammonia supply and regularly faces price increases when global natural gas prices rise.
Bahrain, Iran, Oman, Qatar, and Saudi Arabia also make significant amounts of ammonia and in recent years contributed about 25 percent of the world’s globally traded ammonia. Since March 12, ammonia shipments out of the Middle East, including from Oman’s port in the Arabian Sea, have completely halted. In the United States, benchmark prices rose over 25 percent ($160 per ton) in just the first month of the conflict and have since continued to rise. The price of anhydrous ammonia in the United States increased by nearly $300 per ton between February 2026 and April 2026, due to the Iran conflict.
Urea, the most widely used and globally traded fertilizer, is produced by mixing nitric acid (from ammonia) with carbon dioxide. The Persian Gulf provides 36 percent of the world’s urea exports. Since the conflict began, the benchmark price of urea has risen by over 25 percent. Urea and urea ammonium nitrate account for over 50 percent of the nitrogen-based fertilizer used in the United States and the country imports over 50 percent of that supply, mostly from Saudi Arabia, Qatar, Canada, Russia, and Algeria. The Iran crisis alone could increase farmers’ urea costs by as much as $1.3 billion.
All of this comes on top of recent Ukrainian strikes on Russian fertilizer infrastructure, which have resulted in an 80 percent cut in Russian ammonia exports.
Sulfur is used both as a source of nutrition for plants as well as for making sulfuric acid, a key input for phosphate-based fertilizers and some potassium-based fertilizers. Sulfur is produced as a byproduct of oil and gas production, and Saudi Arabia, Bahrain, the United Arab Emirates (UAE), Kuwait, and Qatar are all major exporters, with the Persian Gulf region providing about 50 percent of the world’s traded supply of sulfur.
Sulfur prices were already increasing before the Iran conflict began due to supply constraints from China, the other key global sulfur supplier. As a result, the benchmark price for sulfur rose 40 percent to $600 per metric ton. Compounding this problem, on May 1, China issued new restrictions banning the export of sulfuric acid, which is used as a substitute for sulfur, thus pushing up global sulfuric acid prices. According to S&P Platts, which tracks commodities and energy markets, the price of sulfuric acid in the United States is now $400 per metric ton, up from $155 per metric ton before the war began and the price of sulfur, which was $650 per metric ton at the beginning of April is now $1,060 per metric ton.
The Persian Gulf region also supplies 26 percent of the world’s traded diammonium phosphate (DAP) and 13 percent of the world’s traded monoammonium phosphate (MAP) fertilizers. Phosphate-based fertilizer prices have not increased as much as nitrogen-based fertilizers since the beginning of the Iran conflict, but hikes in sulfuric acid prices and other inputs are causing slow price increases in many products.
What kind of US policy response can help?
The good news is that most farmers in the United States, especially in the Midwest, purchased fertilizer before the global crises began.
Farmers in the southern United States generally plant a wider variety of crops and do not typically pre-purchase fertilizer products like Midwest farmers do. Those that had been planning to plant nitrogen-based fertilizer dependent crops—such as corn—may switch to crops that use phosphate-based fertilizers instead, like soybeans.
US production of ammonia, enabled by the country’s abundant natural gas resources, is already slated to expand by 22.19 million metric tons per annum (mtpa) by 2030. Multiple new facilities are in the pipeline, though the largest is not expected to be operational until 2028. Congress is also considering the Homegrown Fertilizer Act, a bipartisan bill that authorizes the Secretary of Agriculture to provide grants and loans to independent businesses and other entities to promote the manufacture, processing, and storage of fertilizers in the United States.
Given this state of play, securing financing for new ammonia, urea, and sulfur plants will be helpful for projects looking for capital, but expediting federal and state environmental reviews for facilities that are ready for construction could potentially make a difference for farmers in the next two years. For example, environmental and engineering permits could be expedited for CF Industries Blue Point ammonia plant in Louisiana, Nueces Green Ammonia plant in Texas and Atlas Agro Pacific Green Fertilizer plant in Washington state. According to Agriculture Secretary Brooke Rollins, there are 106 fertilizer projects that received grants under the Biden administration’s Fertilizer Expansion Program that never progressed to the building stage due to stalled climate permits. The US Department of Agriculture could work to identify projects with the greatest completion potential and push the Environmental Protection Agency to expedite their environmental reviews.
The US government has already suspended the Jones Act, which will help alleviate transportation bottlenecks and lower transportation costs for fertilizers, and suspended sanctions on fertilizers from Venezuela. The government should consider maintaining these temporary measures not only throughout the current crisis but until the market rebalances and sufficient supplies are available globally. Canada is a key trading partner with the United States, supplying American farmers with potash and nitrogen fertilizers and importing American-produced phosphate fertilizers. Both US and Canadian agriculture organizations say that modernizing and streamlining customs procedures at the border would facilitate the movement of fertilizer products. Canada could also suspend its tariffs on Russian and Belarussian fertilizers, a move that would reduce fertilizer costs in both the United States and Canada. Because the United States has not placed tariffs on Russian and Belarussian fertilizers, these products are imported into the United States but then sold to Eastern Canadian farmers at inflated prices.
The wars in Iran and Ukraine are not only military and geopolitical, they are also agricultural. As domestic policymakers work to ensure food supplies continue with minimal disruption at home, foreign policymakers should consider the long-term damage to global food affordability as these crises continue.
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Image: Lumin Osity, Unsplash, https://unsplash.com/photos/a-sprinkler-spraying-water-on-a-green-field-6DMht7wYt6g