Escalating conflict in the Strait of Hormuz region is severely disrupting global energy and fertilizer flows, driving up costs and increasing risks to food systems, trade, and vulnerable economies, according to a new analysis by the United Nations Conference on Trade and Development (UNCTAD).
The Strait of Hormuz, a critical artery for global trade, carries approximately one-quarter of the world’s seaborne oil, alongside significant volumes of liquefied natural gas and fertilizers. Since the recent escalation, maritime traffic through the Strait has collapsed, with vessel transits falling by more than 95 percent—from an average of over 100 daily crossings in late February to just a handful within weeks—effectively bringing shipments close to a standstill.
This disruption is triggering cascading effects across interconnected global markets.
Energy prices have surged sharply in response. Oil prices have risen significantly, while natural gas prices have spiked across both Europe and Asia, with Asian markets experiencing near doubling of prices. These increases are having direct consequences for fertilizer production, as natural gas is a key input in the manufacturing of nitrogen-based fertilizers such as urea and ammonia.
As a result, fertilizer markets are already under pressure. Prices for nitrogen-based fertilizers have climbed markedly, with additional increases observed in phosphatic fertilizers. The region’s importance extends beyond energy, as it is also a major supplier of critical inputs such as sulphur, widely used in fertilizer production, and a central hub through which roughly one-third of global seaborne fertilizer trade passes.
For major importing economies—particularly in Asia—the dual disruption to energy and fertilizer supply chains presents significant challenges. Reduced access to natural gas and rising input costs are constraining fertilizer production and availability, with potential downstream effects on agricultural output and food prices.
UNCTAD warns that the current situation highlights the deep interdependence of energy, fertilizer, and food systems. Disruptions in one sector can rapidly transmit to others, amplifying risks to global food security, trade stability, and development prospects.
“The ongoing crisis underscores the vulnerability of interconnected commodity markets,” UNCTAD noted. “Constraints in energy and shipping are increasingly feeding into agricultural systems, with implications for future food supply and affordability.”
The extent of the impact will depend on the duration of the disruption. However, current trends point to mounting pressure across global supply chains, with heightened risks for developing economies and food-importing nations.
