Ramy Danial, London
The United States and Israel’s war on Iran has strained Western households with a sharp climb in fuel prices. However, in the developing world, the war threatens to unleash a generational food crisis. A shortage in fertilisers is a nightmare scenario for dense, rural and poverty-stricken populations that depend on staple items such as bread and rice for their basic calories. The United Nations Food & Agriculture Organisation has warned that diplomatic solutions are the only way to prevent a global food crisis:
The Iranian blockade of the Hormuz Strait, feedstock curtailments and gas producers declaring force majeure are sharply raising global fertiliser prices, an essential component of high-yield agriculture. The Persian Gulf is the largest producer of exported fertilisers; a prolonged conflict, even a war of attrition, could sink developing economies. Fertilisers are a significant geopolitical asset rarely discussed by strategists and analysts, despite being a powerful force in developing markets and a reliable predictor of macro headwinds.
Modern agriculture relies on three micronutrients: nitrogen, phosphorus and potassium. Without synthetic nitrogen fertiliser, known as urea, it is estimated that food production could only sustain about half of Earth’s current population. The International Fertiliser Association (IFA) estimates around 50 per cent of global urea exports originate from the Persian Gulf and Russia. Urea plants are typically located around regions with significant gas reserves, as large quantities are consumed in the production process. The IFA reports between 70 and 90 per cent of urea’s production cost is derived from natural gas pricing. The Russo-Ukrainian war demonstrated the fragility of urea pricing. In early 2020 urea was trading at $200 per tonne, spiking to over $900 per tonne in 2022 as the conflict began and Russia’s gas network came under sanctions.
According to an IFA 2023 report, 30 per cent of global urea supply and 25 per cent of LNG passes through the Strait of Hormuz, which is currently under Iranian blockade. Iran has also targeted energy and industrial facilities across the Gulf. On Wednesday 18 March, QatarEnergy, which exports around 10 per cent of seaborne urea supply, said its Ras Laffan complex went offline following a drone attack.
Entering the fourth week of the war, Middle Eastern urea (FOB) is trading at $750 per tonne according to Bloomberg, up from $485 per tonne in early 2026. The milder market response compared to the Russo-Ukrainian war could be attributed to the Iran conflict having been partially priced in as Iran’s urea exports had already been subject to US sanctions since 2018.
Egypt is a net nitrogen fertiliser exporter, the Kima and Abu Qir plants make it one of the largest global exporters of urea, ranking first in 2023 according to World Integrated Trade Solution. However, a hike in urea prices creates a paradoxical anxiety in Cairo, which has to balance a complex web of political pressures, economic conditions and security considerations.
Egypt’s population of 120m people depends on just 3.8 million hectares of arable farmland along the Nile delta and valley, only 3.5 per cent of its total land area. To maintain high crop yields, soil health and rapid harvest cycles, Egyptian farmers exhaust 540kg of fertiliser per hectare on average, against a global mean of 140 according to the UN Food and Agriculture Organisation.
In 2025 Egypt exported agricultural goods worth $11.5 billion, representing 24 per cent of its total exports. That is a crucial source of foreign currency to fuel Egypt’s net importing economy. Egypt is also the world’s largest consumer of wheat, a consequence of its subsidised bread programme introduced in the 1960s, making bread prices an acutely political subject. The Nile’s farmlands produce around 50 per cent of domestic grain consumption; the remainder is imported mostly from Russia and Ukraine.
When urea prices rise, government owned plants in Egypt are incentivised to sell internationally rather than domestically to farmers entitled to subsidised fertilisers, as foreign currency is needed to service mounting external debt and IMF loan conditions. A urea shortage could see farmers apply less fertiliser per hectare, reducing yields and either cutting agricultural exports or forcing higher grain import volumes at elevated prices.
Emad Ghayes, a supplier of wholesale agricultural leno bags in Egypt’s El Minya district, said farmers are worried: “There’s plenty of rumours around, many falaheen (peasants) come into my store to pick up their orders and each one of them comes with a new story of what the government will do.”
Ghayes said that most people are worried about the grain supply. “Everyone remembers very well the inflation when the wheat imports stopped from Russia and Ukraine. It kind of seems like the same scenario again, that was only three years ago.”
Egypt’s gas supply compounds the problem: despite being Africa’s second largest producer it remains a net importer, with 60 per cent of imports previously sourced from Israel, which issued an emergency decree halting gas exports early in the conflict.
India’s agricultural infrastructure is similarly vulnerable, but its population of 1.4 billion people could trigger a crisis of greater magnitude. In the 1960s, India transformed its agricultural system through the Green Revolution, introducing widespread fertiliser use, subsidised to ensure food security against the famines that had plagued the country for decades. Fertiliser use increased 63-fold between 1961 and 2022, with around 60 per cent produced domestically. The remaining 40 per cent is imported predominantly from the Persian Gulf, amounting to 10 million tonnes annually, making India by far the largest fertiliser importer on the planet.
State companies including the Indian Farmers Fertiliser Cooperative, Rashtriya Chemicals and Fertilisers and National Fertilisers Limited procure fertilisers in bulk ahead of planting season using large government liquidity quotas. However, India’s enormous consumption makes front-loaded procurement a short-term solution for no longer than one harvest.
According to the Indian Ministry of Chemicals and Fertilisers, urea prices above $665 per tonne sustained for several months would enter “crisis territory”, while $800 to $900 per tonne, even briefly, could surpass “breaking point.” As the Strait of Hormuz remains closed, Middle East urea is trading at $750 per tonne, deep into crisis territory. Even if India has the liquidity to purchase at market rates, its consumption scale means physical availability in global supply is unlikely to be sufficient. Unlike Egypt, India has only a 9 per cent agricultural export buffer it can draw on if crop yields fall.
Rodrigo Eyzaguirre, a commodities analyst at FiscalNote, said: “India’s government has already implemented a 30 per cent cut on its fuel rations to farmers. If harvests don’t yield enough food and there isn’t the fuel to transport it, there’ll probably be growing undernourishment there. You can’t simply import food on the scale of India’s needs.”
Kush Patel, the owner of a rice processing factory in Gujarat, was not anxious about the immediate toll of the war because “we are lucky the state agencies order fertilisers ahead of planting season.” However, he added that the likely export limits on rice “would drive down margins, the rice exported brings in double per tonne than that sold locally. I understand why the decision is needed but it’s not good for business.”
As Trump’s war drags on, for developing economies like Egypt and India, the real cost of this war will not only be measured in barrels of oil but also in kilograms of grain.