When geopolitical tensions erupt in the Middle East, global attention usually turns to oil prices. But the escalating confrontation involving Iran, Israel, and the United States has exposed a deeper and less understood vulnerability: fertiliser supply chains passing through the Strait of Hormuz.

For India, the implications extend far beyond energy markets. The disruption threatens agricultural productivity, food prices, government finances, and ultimately the stability of the country’s food system. While oil shocks are visible and immediate, a fertiliser shock unfolds slowly—only revealing its full impact months later when crops fail to meet expected yields.

The crisis emerging around the Strait of Hormuz demonstrates that the most serious geopolitical risk for India may not be fuel—but fertiliser.

The Strait of Hormuz: The World’s Most Dangerous Supply Chokepoint

The Strait of Hormuz is a narrow maritime passage connecting the Persian Gulf to the open sea and serves as one of the most critical arteries of global trade. Between 20% and 25% of global crude oil supply and about 20% of liquefied natural gas (LNG) pass through this chokepoint.

In the aftermath of the Iran-Israel-US escalation, Tehran has threatened to restrict or effectively close shipping through the strait. Even partial disruptions have already shaken markets. Crude oil prices surged from $65 per barrel on February 26 to $75.92 by March 3, while LNG prices climbed from $2.8 to $3.06 per million British thermal units.

Asia is particularly exposed. About 75% of oil and 59% of LNG passing through Hormuz flows to Asian economies, including China, India, Japan and South Korea. India alone accounts for 15% of crude oil shipments and about 25% of LNG shipments through the route.

Yet energy is only one piece of the puzzle.

The Overlooked Crisis: Fertilisers, Not Oil

While headlines focus on crude prices, analysts increasingly warn that the real systemic risk lies in fertilisers.

Modern agriculture depends heavily on nitrogen fertilisers such as urea, produced through the conversion of natural gas into ammonia—a process developed through the early 20th-century Haber-Bosch nitrogen fixation method. This technological breakthrough allowed agriculture to sustain the world’s population by dramatically increasing crop yields. Without synthetic nitrogen fertilisers, global harvests of wheat, maize and rice would collapse.

A striking reality often overlooked in geopolitical debates is that around one-third of globally traded urea passes through the Strait of Hormuz. The Persian Gulf region—home to countries like Qatar, Saudi Arabia, and the United Arab Emirates—has developed massive ammonia and urea production capacity thanks to access to cheap natural gas.

This means the strait functions as a vital conduit not only for energy but for nitrogen fertiliser exports and LNG used to power fertiliser plants worldwide. A closure would disrupt shipments of ammonia, urea and LNG, causing immediate logistical delays and long-term agricultural consequences.

Why India Is Particularly Vulnerable

India’s agricultural system is deeply intertwined with global fertiliser markets. The country imports about two million tonnes of fertilisers every month to meet domestic demand. Import dependency varies by product:

• 100% dependence on imported muriate of potash (MOP)

• Up to 60% dependence on imported diammonium phosphate (DAP)

• Significant imports of urea despite growing domestic production

In fact, despite record domestic output, India imported 8 million tonnes of urea between April and December 2025, an 85% increase year-on-year. During the same period, DAP imports reached 5 million tonnes, up 46% year-on-year.

Much of this supply comes directly from the Gulf region. India sources fertilisers and raw materials from several Middle Eastern producers:

• From the UAE: urea, ammonium sulphate, monoammonium phosphate, potash, rock phosphate, sulphur, ammonia and phosphoric acid

• From Qatar: urea, sulphur, ammonia and natural gas

• From Kuwait: sulphur

• From Bahrain: urea, sulphur and ammonia

• From Saudi Arabia: urea, DAP, NPK fertilisers, sulphur and ammonia

Overall, 20–25% of India’s fertiliser imports originate from the Arabian Gulf, and most of these shipments pass through the Strait of Hormuz.

A Supply Chain Shock in the Making

The conflict threatens to squeeze fertiliser supply precisely when demand is rising ahead of planting seasons. The northern hemisphere typically experiences a surge in fertiliser purchases before sowing cycles.

Even short delays in shipments can disrupt planting schedules. Farmers forced to wait weeks or months for fertilisers must decide whether to pay higher prices, reduce application rates or shift to different crops. But fertiliser use has a disproportionate effect on yields—even modest reductions in nitrogen application can cause sharp declines in output.

If supplies fail to arrive on time, the result could be millions of tonnes of lost crops, triggering ripple effects across livestock feed markets, biofuel production and retail food prices.

For India, this risk is particularly acute as the fertiliser supply chain intersects with the agricultural calendar. Any disruption ahead of the kharif sowing season could strain the availability of nutrients critical for crops such as rice, maize and cotton.

Rising Prices and Fiscal Pressure

Even before physical shortages occur, markets are already reacting. Analysts expect urea prices to rise by 30–40% if Middle Eastern supply chains tighten.

Such a spike would have two major consequences:

• Higher costs for farmers, squeezing margins and potentially reducing fertiliser use.

• Rising subsidy burdens for the government.

Fertilisers are among the most politically sensitive sectors in India’s economy. The government spent ₹1.9 lakh crore on fertiliser subsidies in 2024–25, and this bill could exceed budget estimates if global prices surge.

A sustained disruption would therefore create a fiscal challenge for New Delhi, forcing it to balance farmer support with budgetary discipline.

The Hidden Role of Natural Gas

The fertiliser crisis is inseparable from energy markets. Natural gas is the primary feedstock used to produce ammonia, which is then converted into nitrogen fertilisers.

India’s fertiliser industry is therefore highly sensitive to gas prices and LNG supply disruptions. The country imports roughly 30% of its fertiliser requirements, with the Middle East supplying nearly 40% of those imports. It also depends on the region for around 30% of raw materials such as rock phosphate, phosphoric acid and potash.

If LNG shipments slow due to tensions in the Strait of Hormuz, fertiliser production could also be constrained globally, compounding the supply shock.

The Sulphur Problem Few Are Watching

Another hidden risk lies in sulphur, a key ingredient in phosphate fertilisers. Sulphur is primarily produced as a by-product of oil and gas processing.

If energy shipments from the Gulf decline, sulphur production falls alongside them, tightening supply for fertiliser manufacturers. The result is a cascading effect: less oil production leads to less sulphur, which in turn constrains fertiliser output.

This interconnected system illustrates how the energy and food systems are inseparable.

Global Food Security at Stake

The consequences of a prolonged disruption extend far beyond India. Countries across the world rely on imported fertilisers:

• Brazil depends heavily on nitrogen and phosphate fertilisers to sustain soybean and maize production.

• Even the United States, one of the world’s largest fertiliser producers, imports ammonia and urea to meet regional demand.

• In sub-Saharan Africa, where fertiliser use is already low, higher prices could further reduce application rates, worsening food insecurity.

The fragility of this system stems from the difficulty of expanding fertiliser production quickly. Building new ammonia plants requires enormous investment and years of construction. A sudden drop in exports from a key region cannot be easily replaced.

A Crisis That Unfolds Slowly

Unlike oil shocks, fertiliser shocks are delayed and therefore often underestimated.

Fuel prices react immediately to geopolitical disruptions, prompting instant policy responses. But the impact of fertiliser shortages emerges months later when crop yields fall short.

This delayed effect makes the crisis particularly dangerous. Central banks and policymakers focused on fuel inflation may overlook the agricultural consequences until they become visible in food prices and harvest data.

Historically, spikes in food prices have been closely linked to social unrest and political instability. A prolonged fertiliser shortage could therefore have significant geopolitical consequences.

What India Can Do

To mitigate the risks, India must strengthen resilience across multiple fronts.

1. Diversify supply sources
Reducing reliance on Gulf suppliers by securing long-term contracts with alternative producers such as Russia, Canada and North Africa could help stabilise supply chains.

2. Expand domestic production
Investing in new fertiliser plants and increasing local ammonia production would reduce vulnerability to shipping disruptions.

3. Strengthen strategic reserves
Just as India maintains strategic petroleum reserves, similar buffers for fertilisers or key raw materials could provide temporary relief during crises.

4. Improve agricultural efficiency
Promoting precision farming and balanced nutrient use can reduce dependence on large fertiliser volumes without sacrificing yields.

The Real Lesson of Hormuz

For decades, policymakers have treated the Strait of Hormuz primarily as an energy chokepoint. The current crisis reveals a deeper reality: it is also a critical artery for the global food system.

Oil fuels vehicles and industries. But nitrogen fertilisers fuel agriculture—and ultimately human survival.

If the strait were to remain disrupted for months, the consequences would reach far beyond energy markets. The real price of the conflict might not be measured in barrels of oil but in tonnes of grain.

For India, a nation where agriculture still sustains millions of livelihoods and feeds over a billion people, the lesson is clear. Energy security matters—but fertiliser security may prove even more vital.

In the geopolitical chessboard of the Middle East, the next crisis may not begin at the petrol pump. It may begin in the soil.

With inputs from agencies

Image Source: Multiple agencies

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