Hormuz Strait closure leaves gap in global fertilizer market — and also cuts off the gas we need to fill it

A third of global fertilizer shipments pass through the Hormuz Strait, linking the Egyptian fertilizer industry’s main competition in the GCC with markets worldwide. The closure of the strait has led to supply concerns that have seen global urea prices rise over 29.3% this month, already to USD 584.50 per metric ton.

Egypt has a sizable production capacity and a direct route to Europe to help fill the gap in market, with the country already producing 7-8 mn tons of nitrogenous fertilizers each year, of which 40-50% is exported, Chemicals and Fertilizers Export Council Chairman Khaled Abu Al Makarem tells EnterpriseAM. Egypt produces enough nitrogen-, phosphate-, and potassium-based fertilizers to supply the local market despite market disruptions, Polyserve Chairman Sherif El Gabaly tells us.

But nitrogen-based fertilizers depend on natural gas, which may be directed to prioritize electricity production if the energy squeeze continues. The most important factor to keep production levels where they are at is the continuity of gas supplies to factories, with shortages likely to lead to declines in production, the two fertilizer industry insiders said. Phosphate- and potassium-based fertilizers don’t share the same reliance on natural gas, however, with the two maintaining a surplus relative to local consumption, they added.

Adding fuel to the fire, the EU announced it will keep carbon levies on imported fertilizers under its Carbon Border Adjustment Mechanism, rejecting calls to suspend the scheme despite concerns that it could push up costs for farmers. “The decision is ill-timed, especially given the repercussions of the ongoing war, the rising energy prices, and the halt in urea production from Qatar, the UAE, and Saudi Arabia — the largest gas exporters. Therefore, prices will rise much higher than the ETS carbon price increase,” H2lligence CEO Osama Henein tells EnterpriseAM.

DATA POINT- Worldwide fertilizer consumption — of which nitrogen-based fertilizers account for roughly 60% — is understood to have totaled 205 mn metric tons in 2025, according to the International Fertilizer Association (pdf).