The Iran war’s disruption of fertilizer (especially urea) and energy supplies has begun pushing global food prices higher, though the full effects are still unfolding and remain lagged.

Urea (CO(NH₂)₂), also known as carbamide, is the world’s most widely used nitrogen fertilizer, accounting for over 50% of global nitrogen fertilizer use. It provides essential nitrogen for crops like corn, wheat, rice, and vegetables, supporting roughly half the world’s food production when including all fertilizers.

Urea is produced industrially from ammonia and carbon dioxide (a byproduct of ammonia production) via the following steps:

Ammonia synthesis (Haber-Bosch process): Nitrogen (from air) + Hydrogen (mostly from natural gas) → Ammonia (NH₃). This is energy-intensive and high-pressure/temperature.

Urea synthesis: Ammonia + CO₂ → Ammonium carbamate (intermediate) → Urea + Water. This occurs under high pressure and temperature, followed by dehydration, concentration, and granulation/prilling into fertilizer pellets.

The Haber-Bosch process is the primary industrial method for synthesizing ammonia (NH₃) from atmospheric nitrogen (N₂) and hydrogen (H₂). It underpins modern agriculture by enabling large-scale production of nitrogen fertilizers (like urea) and has been called one of the most important inventions of the 20th century for supporting global food production. Fritz Haber developed the core chemistry (Nobel Prize 1918), while Carl Bosch scaled it industrially (Nobel 1931).

Natural gas dependency: Natural gas (methane) is the dominant feedstock (via steam methane reforming for hydrogen) and energy source. It accounts for 60-90% of production costs in gas-based plants. One ton of urea typically requires about 0.56 tons of ammonia, which in turn needs ~28-36 MMBtu of natural gas.

Gas-based (most efficient, lower emissions): Common in the Middle East, US, Russia, Qatar.

Coal-based: Significant in China (higher emissions and costs in some metrics).

Alternatives (emerging but limited): Electrolytic “green ammonia” using renewable electricity, but currently far more expensive and small-scale.

Plants are often co-located with cheap natural gas sources or LNG terminals due to the tight energy linkage. Global capacity is around 240 million tons (with ~185 million tons demand), led by expansions in Asia and the Middle East.

Trade sensitivity: Much Gulf production relies on seaborne export via the Strait of Hormuz, making it vulnerable to disruptions (as seen in 2026).

Urea is highly water-soluble and effective but can lead to nutrient runoff if over-applied. Production is mature but faces decarbonization pressures (e.g., carbon capture or green methods). Short-term, the industry remains tied to fossil gas, so geopolitical events in gas-rich areas like the Gulf create immediate global ripple effects on food costs and availability.

Disruption to Fertilizer Supplies

The primary “key ingredient” is urea (and related nitrogen fertilizers like ammonia), essential for global crop production. Roughly 1/3 (or up to 35%) of the world’s traded urea and a significant share of other fertilizers and their raw materials (tied to natural gas) originate from or transit the Persian Gulf region.

Strait of Hormuz blockage: Since late February 2026, shipping through this critical chokepoint has dropped dramatically (over 70% in some reports) due to attacks, mines, insurance costs, and Iranian retaliation. This affects not just oil/LNG but fertilizer exports and ingredients.

Price spikes: Urea prices have risen 60-70% or more since the conflict escalated. Ammonia supplies (a foundational material) are also hit.

Yara CEO warning: Svein Tore Holsether (head of one of the world’s largest fertilizer firms) stated the disruption could mean up to 10 billion fewer meals produced per week globally, with the hardest hits on poorer countries and Africa.

Current Price Movements (as of early May 2026)

FAO Food Price Index: Rose 2.4% in March 2026 (second consecutive monthly increase), reaching 128.5 points. It is ~1% above the previous year but still ~20% below the 2022 Ukraine-war peak. Driven by higher energy costs, vegetable oils, sugar, and cereals.

Urea fertilizer: Surged 50-70%+ since late February (from ~$400-500/ton to $700+/ton in spots). Some reports note 54% jump in Feb-Mar alone.

Broader fertilizers and energy: Ammonia up ~20%; overall fertilizer prices could average 15-20% higher in H1 2026 if disruptions persist. Oil and LNG spikes add to farming and transport costs.

Prices are rising but not yet at “crisis” levels globally thanks to buffers.

A prolonged Hormuz disruption would significantly worsen this, potentially leading to broader inflation and hunger spikes in vulnerable regions (FAO warnings of a possible “catastrophe”).

If resolved quickly, some pressures could ease by late 2026.