Iran, one of the world’s largest exporters of strategically important agricultural fertilizer, has suspended urea production as a result of the military actions in the Middle East that erupted in 2025. As a result, chaos has engulfed the global fertilizer markets, leading to unprecedented levels of urea prices.
Causes of Production Halt: Military Factors and Infrastructure Strikes
The situation was further exacerbated by Israel’s missile strike on Iran’s military leadership and nuclear program. Seven of Iran’s urea and ammonia production facilities were shut down due to concerns that they could be targeted in future attacks, according to Mark Milam, senior fertilizer editor at Independent Commodity Intelligence Services. Josh Linville, Vice President of Fertilizers at commodity analytics firm StoneX, noted that the production stoppage was also due to attacks on the country’s gas infrastructure, a critical raw material for nitrogen fertilizer production.
Iran’s Position in the Global Urea Market: Scale and Significance
Iran was the third-largest exporter of urea in the globe in 2024, trailing only China and Qatar. Its exports were approximately 4.5 million tons, which was roughly equivalent to China’s supply. Modern facilities that are certified to international standards are operated by Iranian producers, including Pardis Petrochemical, Shiraz Petrochemical, Kermanshah Petrochemical, and Razi Petrochemical. Their products are distinguished by their high nitrogen content (up to 46%) and low biuret levels, which are essential for producers worldwide.
Iran’s strategic location facilitates the efficient export of goods to China, India, Turkey, African countries, and Latin America. Iran’s urea industry has historically been stable and competitive in price due to its substantial natural gas reserves.
Instant Market Reaction: Price Surge and Panic
The global urea markets responded promptly to the news of the shutdown. According to Linville, the price of urea in the Persian Gulf was approximately $350 per ton last week; however, by Monday, it had risen to exceed $410 per ton. Prices increased from $343–357 to $380–430 per ton in New Orleans, USA; from $395–410 to $430–475 in Brazil; from $380 to $391–450 in the Middle East; from $350–355 to $375–410 in the Black Sea region; and from $425–435 to $520 per ton in the Mediterranean.
Markets began to factor in wartime risks and supply disruptions before the cessation of actual production, as experts have emphasized. This price surge occurred. The crisis has a significant impact on not only Iran but also other exporters such as Egypt, where fertilizer production was also suspended as a result of gas supply cutbacks, according to analysts at Agri-Pulse and Argus.
Global Consequences: Instability and Chaos
The Middle East significantly influences the global commerce of nitrogen fertilizers and potash. In addition to Iran, the second-largest producer of urea globally is Qatar, followed by Saudi Arabia (sixth) and Oman (seventh). Nevertheless, Iran is a significant contributor to global exports, and its loss is akin to the loss of another China in the global market.
Trading Economics anticipates that urea prices may increase to $480–500 per ton if Iran fails to resume production. Granular urea prices in Algeria and Egypt have already surpassed $440–$ 500 per ton, and numerous Brazilian suppliers have withdrawn from the market due to uncertainty.
Impact on US Agriculture and Global Food Security
The significant increase in fertilizer prices has exacerbated the crisis in the US agricultural sector. Due to the high costs and competition from Brazilian producers who harvest twice a year, American farmers experienced a nearly 50% decrease in income in 2024, despite record maize and soybean harvests. The University of Illinois estimates that the average losses are $71 per acre, even after compensation, despite the $10 billion in government aid.
The conflict will result in an additional burden on US producers due to the increase in fertilizer prices. According to experts, Congress may need to take into account the implementation of supplementary aid measures in 2025.
Opportunities and Risks from a Russian Perspective
Despite Western sanctions and logistical challenges, Russia is continuing to increase fertilizer production and exports in the midst of the crisis. Russian producers have the potential to partially address the global supply deficit; however, their capabilities are restricted by infrastructure and financial constraints. Russian analysts caution that additional destabilization, such as a blockade of the Strait of Hormuz, could intensify global inflationary pressures by increasing fertilizer prices and drastically increasing oil prices.
Conclusion: The Future is Uncertain and the Market is in Chaos
Chaos has ensued in the global fertilizer market as a result of Iran’s cessation of urea production. Threats to food security and crop yields confront farmers worldwide due to skyrocketing prices, supply disruptions, and military conflict. The fertilizer market is expected to experience additional fluctuations, and food prices are anticipated to increase in the near future, according to industry experts, unless the Middle East situation is resolved.