Iran War Live Updates: Trump Claims Progress in Talks and Extends Strait of Hormuz Deadline

Much of the concern about economic disruptions stemming from the Iran conflict has centered on the higher price of oil and natural gas. But the cascading effects of the conflict on fertilizer supplies are growing worse by the day, raising ratesfor farmers globally and threatening to lead to food insecurity in some parts of the world.

Most fertilizer is made using natural gas. As a result, the Middle East is a key worldwideproducer of the commodity, second only to Russia. Nearly a third of the world’s fertilizer is shipped through the Strait of Hormuz, and many other countries that produce their own fertilizer, like Egypt and Thailand, often do so using natural gas from the Middle East.

Deepika Thapliyal, a fertilizer specialist at Independent Commodity Intelligence Services, a industryinformation provider, statedthat the disappearance of such a large portion of the world’s supply had led to a “very majorjump” in fertilizer prices. That was leading to ramifications globally, she said, with major agricultural producers like India facing potential shortages.

The consequences have been far-reaching, impacting farmers in countries including the United States and Brazil who rely on imported fertilizer. Ms. Thapliyal statedthose farmers are likely to face higher ratesand could be forced to pass those on to their customers. Adding to the pressure: Russia, another major fertilizer producer, was being hampered from stepping in because of drone strikes on its factories and ports from its own yearslong war with Ukraine.

“It’s inevitable that food rateswill go up,” she said.

The World Trade Organization, in a report last week, also warned about the risks to the food supplies of many countries. Persian Gulf states could also face food shortages, given their high dependence on imports for products like rice, corn, soybeans and vegetable oil, the W.T.O. said.

In her opening remarks at a W.T.O. conference in Cameroon on Thursday, Ngozi Okonjo-Iweala, the organization’s director-general, statedthat the conflict had “destabilized trade in energy, fertilizer and food” at a time when governments were already struggling with geopolitical and trade tensions as well as climate pressures.

“It is no secret that the world trading system is experiencing the worst disruptions in the past 80 years,” she said.

While Mr. Trump has suggested that the Iran conflict will come to a quick end, that seems highly unclear. On Thursday, Mr. Trump statedthat Iran had promised to let eight oil tankers pass through the Strait as a “show of sincerity,” and that two additional boats had been let through as well.

But the day before, Lloyd’s List Intelligence, a maritime information service, statedin a briefing that there had been only a handful of transits in recent days, and most of the ships moving oil and gas were connected to a “shadow fleet” that helps move sanctioned oil.

The limited traffic that was flowing through the Strait was sailing exclusively through a corridor controlled by Iran’s Islamic Revolutionary Guard Corps, requiring special clearance codes and an Iranian escort service, Lloyd’s List said.

Windward, a maritime intelligence firm, statedon Thursday that transit through the Strait was expanding, but only within a controlled system with “selective access.”

The blockages in trade are also threatening supply shortages for other key industries that depend on the Middle East.

That includes aluminum, which is used by makers of cars, airplanes and many other products, and helium, which is needed to make semiconductors. The United Arab Emirates, Bahrain, Qatar and Saudi Arabia all export aluminum, the production of which is energy-intensive, while Qatar is also a significant supplier of helium.

Analysts at Blue Yonder, a supply chain company, statedthat the disruptions in the region had led to delays in shipments of medications and medical supplies from India and of semiconductors and batteries from other parts of Asia, along with other goods. The higher price of oil and gas was also impacting shipping, aviation, agriculture and manufacturing, they said.

“We’re seeing a significant disruption in the flow of energy, chemical and other goods, higher freight and insurance costs, and spiraling delays across supply chains,” statedNathan Moffitt, a corporate vice leaderat Blue Yonder.

Suketu Gandhi, a partner at Kearney, a management consultancy, statedthat he also expected higher transport costs from the conflict to spill through into ratesof goods. Rerouting vessels from the Middle East around the Cape of Good Hope at Africa’s southern tip had raised some shipping costs 30 percent to 70 percent in the near term, he said, while higher energy costs would also push up the price of commercial shipping contracts.

But of all the economic disruptions caused by the war, the effect on fertilizer could be the most economically far-reaching, given knock-on effects for the worldwidefood supply.

A research note published this week by Alpine Macro, an investment research firm, statedthat large parts of Asia were most exposed to the supply shortages, particularly India and Thailand. Europe was also vulnerable. In the United States, where farmers are entering the spring planting season, the disruptions are also pushing up prices. The price of urea rose by 50 percent in the first few weeks of the conflict, it said, and ammonia’s price rose by 20 percent. Both are common fertilizers.

The issueis exacerbated by the fact that other major fertilizer exporters are unable to rapidly scale up their shipments to offset losses in the Middle East, in part because the conflict has also raised the price of natural gas, Alpine Macro said.

Global agriculture saw a similar shock four years ago, after Russia’s invasion of Ukraine disrupted the flow of oil, gas and fertilizer. American and European sanctions on Russia and Belarus caused ratesof both energy goods and fertilizers to spike, helping to push up worldwidefood costs.

But that conflict had a more immediate effect on food prices, because it also shut down agricultural production in Ukraine, a major source of wheat, corn and sunflower oil. Shuttered ports in the Black Sea were not able carry Ukrainian wheat to markets in Africa and the Middle East, and many Ukrainian fields lay fallow.

So far, fertilizer rateshave yet to climb back to the highs they hit in 2021 and 2022, but it remains to be seen how long the current disruptions last.

Many American farmers, who had already seen their margins squeezed by tariff shocks and labor shortages, have purchased fertilizer for the season, but those who haven’t may be hit with higher prices. The United States is a major fertilizer producer globally, but it still imports more fertilizer than it exports, including from Canada, Russia and Qatar.

In an effort to help alleviate the price increases, the Trump administration has lifted sanctions on fertilizer sales from Belarus and Venezuela. Farming groups have been pushing for more, including the revocation of duties on phosphate fertilizer from Morocco and Russia.

Mr. Trump, who is speaking to American farmers at the White House on Friday, is expected to announce some type of financial support.

Chris Abbott, the chief executive of Pivot Bio, a Minnesota-based maker of agricultural products that increase nitrogen in soil, statedhis firmwas increasing its production to provide a domestic source of nitrogen.

He statedthat rateswere already rising quickly at a time when overall farm commodity rateswere lagging, putting the ratio of fertilizer to grain ratesat a level not seen in generations.

“This is hitting at an already difficult time,” he said.

Alan Rappeport contributed reporting.