Dire fertiliser shortage a lurking threat due to Hormuz crisis

This article is published in association with United Nations.

Since the start of the Middle East conflict with Israeli and US strikes on Iran on 28 February, concerns have been growing over rising oil and commodity prices.

At the centre of it lies the Strait of Hormuz – one of the world’s most critical maritime chokepoints – which carries around a quarter of global seaborne oil, along with significant volumes of liquefied natural gas and fertilisers, according to a recent UN report.

To better understand the implications of this disruption, and the findings of the report published on 10 March, UN News spoke to Frida Youssef, Chief of Section for Economic Affairs at UN Trade and Development (UNCTAD).

Worldwide consequences

Ms. Youssef explained that the traffic in the Strait where the Persian Gulf narrows has fallen from around 130 ships a day before the crisis to single digits in early March, a decline of more than 95 per cent. 

Today, the Strait is not formally closed, but severely constrained, amid multiple Iranian attacks on shipping since war erupted that have spooked global energy markets and driven up prices. 

Spillovers beyond Hormuz

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“The disruption is no longer confined to the Strait of Hormuz; it is spreading across regional shipping routes and affecting critical supply lines” Ms. Youssef explained.  

The knock-on effects of this disruption are being felt across the Red Sea and beyond, with vessels rerouted, journeys extended and costs rising. This is adding pressure to global trade and humanitarian agencies who face slower, more expensive and less predictable aid shipments.

Impact on economies and citizens

While the immediate fallout of the Hormuz Strait crisis has meant higher energy costs, more expensive transport, rising food prices and delays in supply chains, the drop in regional fertiliser exports threatens to have extremely serious consequences, too.

UNCTAD underlines rising production costs for fertilisers and particularly nitrogen-based ones, which depend heavily on gas originating from Gulf States.

This is already putting pressure on agricultural production and productivity, with likely consequences for global food prices. “Timing is critical,” says UNCTAD’s Ms. Youssef. 

Least-able to cope

“It is now the spring planting season, when countries and farmers typically purchase fertilizers for the next harvest. If they are unable to secure enough supply — or if prices are too high — crop yields could decline.”

The world’s least developed economies have “the least capacity to absorb shocks (and) are the ones that will feel the effects most strongly”, she continues.

For them, higher costs for fuel, food, fertilisers and transport could quickly translate into pressure on public finances and household budgets. This can reduce food production and increase food insecurity, particularly where import dependence is high.

How the UN can help

Despite all these challenges, “there is a shared global interest in keeping trade routes open, because disruptions of this scale affect all economies”, Ms. Youssef insists. UNCTAD is monitoring developments closely and providing data and analysis to support governments, she explains. 

The UN agency also helps to bring together national governments and partners to share information and coordinate their actions, while stressing the importance of keeping maritime transport secure and predictable, in line with international law.