Hormuz matters for more than oil — a third of global fertilizer supply at risk

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WHAT WE’RE TRACKING TODAY

TODAY: Fertilizer supply under pressure from Hormuz disruption

Good morning, nice people. We’re in the second week of the regional war, and the escalation shows no signs of slowing. Energy and maritime infrastructure continue to take the hardest hits, and global supply chains are on edge.

We have a confession — we’ve been too focused on oil and gas, but in our big story today, we’re shining a spotlight on other commodities at risk. Fertilizer supply is under pressure as tightening Hormuz traffic sends ripples through global markets, with knock-on effects potentially far larger than expected.

ALSO- Last week, we flagged Saudi Arabia’s Red Sea energy pivot. Don't miss our follow-up: can the plan survive massive storage limits?

Watch this space

STORAGE — Egypt opens Red Sea oil storage to int’l players amid Hormuz closure: Egypt has offered 10 crude and petroleum storage facilities for lease in the Red Sea, a senior government official tells EnterpriseAM. Egypt aims to attract oil deliveries from Saudi Arabia, Kuwait, Iraq, and Qatar, while doubling storage capacity at its Sumed- and Ras Badran-associated facilities, the source said.

The news follows Egypt offering its Sumed pipeline from Ain Sokhna to Sidi Kerir to facilitate the transfer of Saudi crude oil from the Red Sea’s Yanbu Port to the Mediterranean as a workaround to the Hormuz Strait being effectively closed due to ongoing hostilities, as well as rising ins. premiums. Egypt already has existing contracts with Saudi Arabia’s Aramco, as well as Kuwaiti and Qatari companies, for the pipeline’s operation, the source added.

Why this matters: Today is day T-minus 18 out of a 25-day countdown before GCC oil producers run out of storage space, according to analysts at JPMorgan. If the strait remains closed beyond this window, producers may have to stop output entirely because there will be nowhere left to store the oil.

LNG — Qatar is parking part of its LNG fleet on the charter market as the shutdown of its major export facility continues. Around 10 carriers tied to QatarEnergy cargo flows have now been offered for hire. Eight vessels were offered on the spot market, and the other two had sailed earlier and are currently positioned off the west coast of Africa.

Why this matters: This is a rare signal that vessels that move Qatari gas now have nothing to load. For LNG shipping, the sudden availability of multiple Qatar-linked vessels is a visible ripple from a supply disruption upstream.

Hire costs for carriers that move the super-chilled gas have jumped sharply in recent days as traders scramble for available vessels, with some modern ships reportedly costing near USD 300k per day, several multiples above normal levels.

Background: Qatar normally ships some 77-80 mn tons of LNG annually, roughly 20% of the global LNG supply, with cargoes typically lifted from Ras Laffan under long-term contracts and coordinated vessel schedules. We did a deep dive into how Qatar’s LNG halt impacts global markets.

TRADE — South Korea is getting more than 6 mn barrels of crude from the UAE. Two South Korean tankers will head to an Emirati port that does not require passage through Hormuz to lift some 4 mn barrels directly. The remaining 2 mn barrels will come from a joint UAE-South Korea stockpile stored inside the Asian country.

Alternative to Hormuz: Transiting crude via the Habshan-Fujairah oil pipeline to the Port of Fujairah is currently the most viable alternative for UAE crude exports.

Background: Korea National Oil Corp (KNOC) has a storage agreement with Adnoc that allows the Abu Dhabi-based company to store crude in Korean strategic reserves. The agreement allows Adnoc storage access in Northeast Asia, while South Korea gets priority access to the barrels during emergencies. KNOC also has a similar agreement with Aramco.

Market watch

Oil prices surged 25% to a two-year high this morning as the regional war tightened energy supplies and lowered hopes of interest cuts, Reuters reports. Brent crude futures increased to trade at USD 119.50 / bbl, while US West Texas Intermediate (WTI) was up to USD 119.48 / bbl.

The Baltic Index extends its decline: The Baltic Exchange’s dry bulk sea which tracks rates for the capesize, panamax, and supramax vessel segments — fell 6% to 2,010 points on Friday, marking a third straight session of losses. The capesize dropped 10.8% to 2,631 points, and the panamax index slipped 1.8% to 1,962, while the smaller supramax index went down 0.4% to 1,386 points.

The Drewry World Container Index increased by 3% to USD 1,958 per 40-ft container last week, according to the latest index readings. The rise is driven by an increase across the transpacific and Asia-Europe rates, especially the Shanghai-Los Angeles (10%) and Shanghai-New York (7%) with gradual return to full production after Lunar New Year factory shutdowns.

Data point

The UAE’s non-oil private sector hit a 12-month high in February, with the seasonally adjusted purchasing managers’ index rising to 55.0 from 54.9 in January, according to the S&P Global UAE PMI (pdf). The reading remains well above the 50.0 neutral threshold, signaling a robust growth trajectory fueled by strong domestic demand and significant activity in the construction, real estate, logistics, and tech sectors.

The breakdown: Business activity surged at its fastest pace since April 2024. While export sales remained modest, domestic orders were buoyed by increased tourism, e-commerce expansion, and a spike in demand for AI-related products. Supply chains also remained resilient, with firms reporting rapidly improving lead times that allowed for a strategic rebuilding of inventories.

It was a different story in Dubai, where the PMI momentum decoupled from the national trend, slipping to 54.6 from 55.9 in January. While the expansion of output and new orders in the emirate lost some steam, it remained sharp overall. Crucially, the labor market showed significant strength, with job creation in Dubai reaching a two-year high in February as firms aggressively expanded capacity to manage future workloads.

What’s next? “The outlook is also positive, as demand has continued to pressurise business capacity, suggesting additional expansions in output and employment may be necessary,” said David Owen, senior economist at S&P Global Market Intelligence. The lack of friction in input supply chains has “allowed companies to rebuild stocks, putting them in a better position to meet client demand,” Owen added.

PSA

MSC introducing emergency fuel surcharge: Shipping giant MSC will impose an emergency fuel surcharge from 16 March on cargo from the Mediterranean and Black Sea to the Indian subcontinent, Red Sea, and East Africa. Rates for Red Sea shipments will be USD 30 per TEU for dry containers and USD 50 for reefers, rising to USD 60 and USD 90 for East Africa. Cargo to the Indian subcontinent will incur USD 40 per TEU for dry boxes and USD 60 for refrigerated containers.

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Another commodity that regional escalation could hit

Yes — Hormuz matters for way more than oil & gas: Roughly one-third of global fertilizer shipments pass through the strait, linking Gulf production hubs with agricultural markets worldwide. With shipping through Hormuz disrupted, fertilizer markets are already repricing the risk — raising the prospect of higher crop input costs and, eventually, food prices.

Nitrogen fertilizers are the driver of modern agriculture. Methane is converted into ammonia and then upgraded into urea and other nitrogen products used to boost crop yields. Around half of global food production depends on synthetic nitrogen fertilizers, with 180 mn metric tons consumed globally each year.

Why this matters? The Gulf dominates the market, and nearly all of its output must move through Hormuz. Around 55-60 mn metric tons of urea are shipped by sea annually, with the Middle East accounting for some 40-50% of that volume. Iran exports some 5 mn tons, while Saudi Arabia contributes some 4-5 mn tons through producers like Sabic.

Energy shocks have amplified the pressure since natgas is the main input for nitrogen fertilizers. “Natural gas’ key role as a fertilizer input could hit agricultural producers, impacting food prices,” MENA Director at Horizon Engage Andrew G. Farrand told EnterpriseAM. Qatar’s shutdown of the Ras Laffan LNG export facility sent reverberations through the industry. Qatar accounts for roughly 11% of global urea exports, according to Bloomberg Intelligence analyst Alexis Maxwell. The country exports some 5.5-6 mn tons of urea and ammonia annually from its Qafco complex.

Markets reax: Prices for granular urea surged by USD 60 per metric ton after the effective closure of the strait. In the US Gulf, spot for urea jumped USD 60-80 from last week, with traders warning that increases could follow if disruptions persist.

Supply chains were already tight before the conflict escalated: Urea markets turned bullish earlier after drone damage hit a Russian nitrogen plant, tightening availability. The US, despite producing domestically, still relies on imports from the Middle East that transit Hormuz.

Fertilizers may not even be the first agricultural bottleneck to bite: For some high-tech growers, specialty inputs such as pollinators and biological pest-control supplies can become harder to replace before fertilizer shortages become tight. That means prolonged disruption can start weighing on yields through the wider agricultural input chain, not through urea prices alone.

Adding fuel to the fire, the EU announced that it will keep carbon levies on imported fertilizers under its Carbon Border Adjustment Mechanism (CBAM), rejecting calls to suspend the scheme despite concerns 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," Osama Henein, H2lligence founder and CEO, told EnterpriseAM.

The impact on the food supply chain

The hit to food supply in our region may not be immediate: Gulf growers carry several weeks — five to eight — of core inputs on hand, including fertilizers, helping cushion short disruptions, CEO of Pure Harvest Sky Kurtz told EnterpriseAM.

That does not mean it’s not building: “We would start to feel pain after a period of time if there were complete blockages and we couldn't get goods through the borders,” Kurtz told us.

But retailers are already scrambling to reinforce food supply chains: UAE retailer Lulu Group began chartering cargo flights to secure the food supply chain, with a freighter that carried some 80 metric tons of fruits and vegetables from India landing in Abu Dhabi. Additional shipments are being arranged.

Fertilizer is not the only industrial commodity exposed

The Gulf has also become a major aluminum production hub, accounting for more than 8% of global output and shipping over 5 mn metric tons of metal through Hormuz annually from smelters in Bahrain, Qatar, KSA, and the UAE. Aluminium Bahrain recently declared force majeure, after Qatari smelter Qatalum said it was shutting down operations.

Export disruptions are already appearing in the metals market: Regional aluminum producers have warned customers of delays, with war-risk premiums increased or canceled. Western buyers are already stressed, coping with reduced access to Russian aluminum and shrinking inventories on the London Metal Exchange.

Alternative export routes may offer limited relief: Traders say trucking aluminum to ports outside the Gulf — such as Jeddah in Saudi Arabia — would require an impractical number of trucks running continuously to move equivalent volumes. The same logic applies across agriculture, where alternative routes exist, but they also raise costs.

Gulf producers forced to turn off the taps

Once a producer’s storage is full, the tapsmust stop. For Gulf nations, a halt in oil production not only represents lost revenue, but also long-term technical risks. Shutting down a well can damage the reservoir, meaning that restarting production once the Strait reopens will not be simple.

If Hormuz stays shut, the squeeze will start spreading into feedstocks and refined products as more Gulf producers lose room to unsold barrels. QatarEnergy declared force majeure on its LNG shipments last week, and Saudi Arabia and the UAE could be next as stores pile up and the export route stays blocked, pushing the crisis past shipping disruption and into physical supply loss.

Things are already starting to hurt

The Fujairah Oil Industry Zone saw another fire caused by falling debris — after air defenses intercepted an Iranian drone and the emirate saw another fire early this morning from falling shrapnel. As of yesterday, Iran had launched 1.4k drones against the UAE — 1.3k of which were intercepted while 80 landed — as well as eight cruise missiles that were all intercepted.

Meanwhile, Kuwait Petroleum Corporation cut crude output and refining throughput and declared force majeure on Saturday after the Hormuz crisis blocked shipments for an eighth straight day. Kuwait was producing around 2.6 mn bpd in February, and it’s also a major naphtha exporter to Asia and jet fuel exporter to north-west Europe.

The pressure is also hitting fuel infrastructure onshore. A drone struck two fuel tanks at Kuwait International Airport on Sunday, igniting a fire that was later brought under control with no injuries reported.

Iraq also halted production at the Rumalia oil field due to limited storage capacity. The country had already suspended all crude oil shipments through the Kirkuk-Ceyhan pipeline to Turkey’s Mediterranean coast last week, removing approximately 200k bpd from global markets and threatening the already fragile economy of the Kurdistan region of Iraq. A prolonged shutdown at Rumaila and fields in Kurdistan could have a significant impact on Iraq’s production levels and its trade with global markets –– with the duel suspensions costing the country some USD 128 mn per day.

The Rumalia oilfield, Iraq’s largest producing point, spans some 1.6k sqm and accounts for one-third of the country’s output.

Ripples across the region

Aramco is temporarily rerouting some oil shipments via the Red Sea port of Yanbu, Al Ekhbariya reports. The oil giant is working to ensure the reliability of oil supplies amid the ongoing conflict, with plans to restore operations once conditions stabilize, the company reportedly said.

REMEMBER- The Kingdom reportedly rerouted Asian energy shipments to the Red Sea port last week. Rising costs tied to the Strait of Hormuz disruption — higher ins. premiums and security risks — have prompted a logistical pivot.

A light at the end of the strait?

Adnoc confirmed its operations are going ahead despite the current regional tensions. The company said it is leaning on export capacity that bypasses the strait, as well as its international storage facilities, without disclosing specifics. It seems like Adnoc is increasingly relying on its Habshan-Fujairah pipeline — responsible for roughly half of the UAE’s total oil production at a 1.5 mn/bpd capacity — which avoids Hormuz entirely.

Sending mixed signals: Adnoc also said it was “managing offshore production levels to address storage requirements,” suggesting it planned to cut back oil production, without providing further details.

The Hormuz oil supply disruptions will be offset by a general global oversupply, a Fitch Ratings report finds, noting that the Hormuz closure is likely to be “temporary” and cause “limited” shock to oil prices. Global inventories sat at 8.2 bn barrels at the end of 2025 –– sufficient enough to cover a pause in oil shipments through the Strait of Hormuz for over 400 days, Fitch data finds. High global inventories and significant spare capacity are set to subdue the geopolitical risk premium and oil price spikes.

Fitch remains steady on its 2026 forecast. The ratings agency does not expect its USD 63 / bbl Brent oil forecast for 2026 to experience a significant increase, noting that “a protracted closure would affect both exporting and importing countries and therefore is not our baseline assumption.” The agency is expecting supply to rise by 2.4 mm / bpd and demand by 0.8 mm / bpd.

Can Saudi Arabia's storage capacity prove sufficient?

How will Saudi Arabia’s goal of pivoting its energy output to the Red Sea hold up amid massive storage capacity limitations? A 25-day countdown started a week ago — marking the time Middle East oil producers have before they run out of storage space. If the Strait of Hormuz remains closed beyond this window, producers may have to halt output entirely because there will be nowhere left to put the oil. Saudi Arabia began rerouting Asian energy shipments to Yanbu on the Red Sea last week — and we spoke to Antoine Halff (LinkedIn), cofounder and chief analyst at geospatial intelligence platform Kayrros, to break down the multifaceted issue of storage.

IN CONTEXT- Regional players are scrambling to identify an alternative path to Hormuz as the conflict continues and the closure of the strait weighs heavy on regional energy shipments. Rising costs tied to Hormuz — from higher ins. premiums to security risks — are forcing a major rethink of regional logistics.

ENTERPRISEAM: How ready is Yanbu's storage capacity to handle an increase in crude for export?

ANTOINE HALFF: Storage capacity at Yanbu is very large, though not quite as expansive as Ju’aymah’s. Yanbu al-Sinaiyah has a total capacity of around 26 mn barrels but only half of that is terminal storage, the other half is refinery storage. Yanbu Al Muajjiz has about 11 mn barrels of nominal capacity. However, if traffic is unimpeded in the Red Sea, then the disadvantage of smaller capacity is obviously more than offset by the ability to use the storage to support outbound flows, not simply to hold static inventories.

ENTERPRISEAM: Given that storage sites in the kingdom are filling up quickly — as per your recent coverage — would Yanbu be able to balance the current choke in crude flows?

ANTOINE HALFF: The key factor here is the exceptional degree of connectivity, optionality, and flexibility of the Saudi system. Saudi energy facilities are highly interconnected and form a uniquely dense and agile system.

This is not an absolute panacea in the face of such an event as the closure of the Strait of Hormuz — there is no miracle cure for that aside from clearing the Strait. But it gives the Saudi oil industry a remarkable degree of resilience and it is clearly a competitive advantage.

This was demonstrated at the time of the Abqaiq attack in September 2019, when the Saudi Energy Ministry and Saudi Aramco were able to weather the storm remarkably well. This time around the crisis is arguably more severe, but I think we are likely to be surprised by the ingenuity of the Saudi response in the face of adversity.

Background

Major crude oil storage sites in the kingdom are filling up quickly — as Saudi Arabia’s key export route through the Strait of Hormuz remains closed to shipping, Halff said on LinkedIn. Four out of six tanks at the Ras Tanura refinery are already full, and the Ju’aymah terminal on the country’s east coast is “quickly running out of space.”

ALSO- We did a deep dive on Saudi’s leading petroleum solution last week and Egypt’s potential role as a pipe-to-land bridge for the kingdom to the Mediterranean.

Trump has a plan for Hormuz — but shipowners aren’t convinced

Trump has a plan — but shipowners aren’t convinced: US President Donald Trump announced a plan for the US Navy to escort tankers through Hormuz, as well as for the US Development Finance Corporation to provide state-backed war-risk ins. The move is intended to ensure energy flows, but has been met with skepticism and confusion by global shipowners and insurers.

The US deployed a maritime reinsurance initiative –– including war risk –– which will insure losses of up to USD 20 bn “on a rolling basis” on vessels, according to a statement released on Friday. The move aims to restabilize the flow of energy and commercial trade in the Gulf as oil prices surge. For now, the coverage will focus on hull, machinery, and cargo.

Let’s break it down: The owners of ships currently stuck in the Arabian Gulf have said that naval escorts would not persuade them to transit while combat operations continue. Protecting the high volume of tankers transiting the region is viewed as impractical, as it would require a massive deployment of warships and military assets.

Why this matters

Where do we stand? War risk premiums for vessels transiting the Red Sea and Gulf of Aden surged –– hitting as much as 1000% in some cases. With at least nine ships already damaged, tension remains high and total losses from the damaged vessels are forecasted to be at USD 1.75 bn.

The new ins. rate of 3% would suggest a hull war risk premium of around USD 7.5 mn –– up some 0.25% or USD 625k, before the conflict launched last week, analysts at Jefferies estimate. While other analysts set the ratings between 1% and 1.5% of vessel value, as the “rate spectrum is wide and varied depending on many factors, including whether the vessel is east or west of the Hormuz chokepoint,” UK-based firm Marsh VP Dylan Mortimer said.

Maritime specialists remain skeptical: “No one in the Gulf has any details on how [Trump’s] plan will work,” Amena Bakr, Kpler head energy research at data and analytics wrote on X, noting that, “Our experts don’t think Trump’s vessel escort idea will work as vessels will be heavily exposed to Iranian missiles. And even if they do manage to escort the vessels the cost will be too high.”

Shipbrokers aren’t convinced: "Ins. doesn't make the hull impervious to rockets," shipbroker Odin head petroleum and tanker analyst Alpman Ilker said. "Ins. may incentivize a few to start transiting but the Iranians will likely attack and then traffic will again cease transit."

And neither are shipping associations: “Providing protection for all tankers operating in areas currently threatened by Iran is unrealistic as this would require a very high number of warships and other military assets,” Bimco said.

In the ins. market, coverage remains available — for now: The London ins. market is “willing and able,” to cover ships looking to transit the strait, broker Arthur J Gallagher & Co and Lloyd’s Market Association said on Thursday. With the majority of these vessels already insured in the London market.

Still, uncertainty remains around the US backstop: London-based insurers have yet to incorporate the proposed US backing into the war-risk market, citing uncertainty over how the scheme would function in practice.

SAL acquires Belgian cargo handler Aviapartner Liège

SAL Saudi Logistics to acquire Aviapartner Liège for EUR 28 mn

SAL Saudi Logistics Services is expanding into Europe, having signed a EUR 28 mn (SAR 123 mn) sale and purchase agreement to fully acquire Belgian ground handling and cargo service provider Aviapartner Liège from Aviapartner Belgium and Aviapartner Holding, it said in a Tadawul disclosure. The self-funded move awaits regulatory sign-off.

Why it matters: The acquisition would give the Saudi logistics heavyweight a firm footprint in a key European freight hub, capturing logistics flows between Europe and the GCC by bypassing third-party intermediaries.

Calendar

2026

MARCH

9-13 March (Monday-Friday): World Cargo Alliance Worldwide Conference, Singapore.

10-12 March (Tuesday-Thursday): World Cargo Symposium, Lima, Peru.

18-19 March (Wednesday-Thursday): IntraLogisteX, Birmingham, United Kingdom.

18-19 March (Wednesday-Thursday): Green Marine Transport Conference, Amsterdam, The Netherlands.

26 March (Thursday): Gulf Ship Finance Forum, Dubai, UAE.

APRIL

12-15 April (Sunday-Wednesday): Saudi Smart Logistics, Riyadh, Saudi Arabia.

16-17 April (Thursday-Friday): Global Supply Chain and Logistics Summit, Amsterdam, The Netherlands.

28-30 April (Tuesday-Thursday): Mediterranean Ports and Logistics, Porto, Portugal.

MAY

12-14 May (Tuesday-Thursday): The Airport Show, Dubai, UAE.

12-14 May (Tuesday-Thursday): Aviation Energy Forum (AEF), Paris, France.

19-21 May (Tuesday-Thursday): Ground Handling Conference (IGHC), Cairo, Egypt.

19-21 May (Tuesday-Thursday): Terminal Operations Conference & Exhibition, Hamburg, Germany.

JUNE

2-4 June (Tuesday-Thursday): ProPak Mena, Cairo, Egypt.

6-8 June (Saturday-Monday): IATA World Air Transport Summit, Rio de Janeiro, Brazil.

22-23 June (Monday-Tuesday): Decarbonizing Shipping Forum, Rotterdam, Netherlands.

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