The Persian Gulf region is one of the world''s major fertiliser production hubs. Iran is the fourth largest exporter of urea globally, while Saudi Arabia and Qatar are also major suppliers in this market. However, nitrogen fertiliser production relies heavily on natural gas. Energy costs account for roughly 60 to 80 percent of total production expenses. When energy supply becomes uncertain, fertiliser production costs rise rapidly and global prices tend to follow.

This tight coupling between energy and fertiliser markets means that any geopolitical shock in the Middle East simultaneously triggers a dual crisis, first in fuel, then in food.

Five Gulf producers, Iran, Qatar, Saudi Arabia, the United Arab Emirates, and Bahrain, accounted for roughly 34 percent of global urea trade and about 23 percent of ammonia exports in 2024, highlighting the region’s central role in the fertiliser supply chain.

Signs of volatility have already begun to appear in the fertiliser market amid the recent tensions. The price of Egyptian urea, a key benchmark in global markets, climbed to around $505 per tonne in early March as supply fears intensified but earlier in late February, prices were noticeably lower, reflecting rising uncertainty in the fertiliser trade. Such a sharp increase in a short period reflects the level of concern spreading through the market.

Markets, in this case, are not reacting to actual shortages alone but to the anticipation of disruption, a reminder that perception of risk can be as powerful as disruption itself.