Breaking Down the March 2026 NDSU Agricultural Trade Monitor: The Strait of Hormuz Closure and Global Fertilizer Trade Disruptions

The March 2026 edition of the NDSU Agricultural Trade Monitor examines how the closure of the Strait of Hormuz is disrupting global fertilizer markets and reshaping agricultural input supply chains. Triggered by the military operation known as Operation Epic Fury and subsequent Iranian retaliation, the disruption has effectively halted commercial shipping through one of the world’s most important maritime chokepoints for energy and fertilizer trade.

The report highlights how a sudden interruption at this critical corridor has implications far beyond the Persian Gulf. Fertilizer exports, key feedstocks such as sulfur, and global agricultural supply chains are all affected. While the United States has some insulation from supply disruptions and price volatility due to domestic fertilizer production, many countries face greater exposure.

A central theme of the report is that the Strait of Hormuz functions as a global fertilizer chokepoint. When it closes, the effects propagate through multiple interconnected markets, tightening fertilizer supply, increasing production costs, and raising uncertainty across global agricultural systems.

The Strait of Hormuz Closure and the Immediate Market Shock

The crisis began on February 28, 2026, when the United States and Israel launched Operation Epic Fury targeting Iranian nuclear and military infrastructure. Within hours, Iran retaliated with drone strikes on commercial shipping in the Persian Gulf and declared the Strait of Hormuz closed.

By early March, tanker traffic through the Strait had dropped to near zero. Major global shipping companies suspended transit through the corridor, and major protection and indemnity clubs withdrew war-risk insurance coverage. Without insurance coverage, commercial shipping through the Strait became economically and legally unviable, effectively halting maritime transport through one of the world’s most critical trade routes.

The immediate market reaction reflected the scale of the disruption. Energy markets experienced the largest shock, with crude oil and natural gas prices rising sharply. Agricultural commodities also moved upward, reflecting concerns about fertilizer availability and input cost.

Exhibit 1: Market Response to Operation Epic Fury (Changes Between February 27 and March 9, 2026).

Source: NDSU using data from Bloomberg.

The key uncertainty is how long the Strait will remain closed. Even if hostilities subside quickly, restoring commercial shipping could take time, particularly if insurers delay reinstating war-risk coverage.

A Global Fertilizer Chokepoint

The Strait of Hormuz is one of the most important corridors for global fertilizer trade. A large share of globally traded fertilizer and fertilizer feedstocks exits the Persian Gulf through this narrow passage.

Persian Gulf countries account for roughly 43% of seaborne urea exports, approximately 44% of seaborne sulfur trade, and more than a quarter of global ammonia exports. These products are critical inputs for global agricultural production, particularly nitrogen and phosphate fertilizers.

Unlike the disruptions experienced during the 2022 Russia–Ukraine fertilizer crisis, fertilizer produced in the Gulf cannot easily be rerouted when the Strait is closed. Large export volumes are physically trapped behind the chokepoint.

The global reach of the disruption is substantial. Major importers of fertilizer exports transiting the Strait include India, Brazil, China, and the United States. When shipments stop flowing, the effects extend across multiple regions simultaneously.

Exhibit 2: Share of Global Fertilizer Trade Disruption at the Strait of Hormuz.

Note: Red indicates directly affected Persian Gulf exporters (Iran, Iraq, Saudi Arabia, Qatar, UAE, Oman, Kuwait, and Bahrain). Blue indicates secondarily affected regional producers/exporters exposed to spillover disruption, including Egypt (gas cutoff risk),

Jordan, and Israel. Percentages in the call‐out boxes show the share of global exports of sulfur, urea, phosphate, and anhydrous ammonia supplied by neighboring Persian Gulf countries.

Source: NDSU using 2024 export data from the S&P Global Trade Atlas.

The Sulfur Cascade and Global Phosphate Supply Risks

Beyond direct fertilizer exports, the report highlights the importance of sulfur as a key feedstock for phosphate fertilizer production.

Sulfuric acid is required to produce phosphate fertilizers such as DAP and MAP. Persian Gulf countries produce roughly 44% of globally traded sulfur, most of it generated as a byproduct of oil and gas refining.

When the Strait of Hormuz closes, the disruption blocks not only finished fertilizers but also sulfur shipments used by producers elsewhere. This creates a cascading effect across global fertilizer markets.

China, Morocco, and Indonesia rely heavily on sulfur imports from the Middle East. China imports roughly four million metric tons annually from the Gulf, while Morocco’s OCP Group, the world’s largest phosphate exporter, depends on approximately 3.7 million metric tons.

Without these inputs, phosphate production in these countries becomes constrained, tightening global fertilizer supply and increasing production costs.

Exhibit 3: The Sulfur Cascade: How the Hormuz Strait Closure Disrupts Phosphate Production Worldwide.

Source: NDSU using 2024 trade data from the S&P Global Trade Atlas, Argus Media, CRU Group, and The Fertilizer Institute.

U.S. Exposure Compared with Other Agricultural Economies

Exposure to the Hormuz disruption varies significantly across countries. For the United States, the impact depends on the fertilizer product.

Domestic production provides a strong buffer against nitrogen fertilizer prices. The United States produces approximately 94% of its ammonia domestically, limiting its direct dependence on Persian Gulf ammonia shipments.

However, exposure is greater with urea and phosphate fertilizers. Approximately 17% of U.S. urea consumption and roughly 20% of U.S. phosphate consumption originate from Gulf exporters whose shipments must transit the Strait of Hormuz.

Trade policy developments have further concentrated phosphate sourcing. Countervailing duties on Moroccan fertilizers and export restrictions from China have increased U.S. reliance on Saudi phosphate shipments, which are currently blocked by the Strait closure.

Other agricultural economies face greater vulnerability. Brazil, for example, imports more than 80% of its fertilizers and relies heavily on imports of nitrogen and phosphate. The closure of the Strait removes a key supply source while also constraining alternative suppliers.

Why the 2026 Shock Differs from the 2022 Fertilizer Crisis

The report also compares the current disruption with the fertilizer and grain market shock that followed Russia’s invasion of Ukraine in 2022.

Both events removed major fertilizer suppliers from global markets, but the mechanisms differ significantly. In 2022, Russian fertilizers were largely rerouted to new markets despite sanctions and logistical disruptions. In contrast, the Hormuz closure represents a physical chokepoint disruption that prevents Gulf fertilizer exports from reaching global markets at all.

Another important difference concerns agricultural commodity markets. The Russia–Ukraine crisis disrupted grain exports and sharply raised crop prices. These higher crop prices partially offset rising fertilizer costs for farmers.

The Persian Gulf, however, is not a major grain export region. As a result, the Hormuz disruption primarily increases fertilizer costs without generating a comparable rise in crop prices. If the closure persists, fertilizer prices could approach or exceed the peaks seen during the 2022 crisis, further pressuring farm margins.

Read the full March 2026 NDSU Agricultural Trade Monitor: https://doi.org/10.22004/ag.econ.396250

For inquiries, contact:

Shawn Arita – shawn.arita@ndsu.edu

Rwit Chakravorty – rwit.chakravorty@ndsu.edu

Jiyeon Kim – jiyeon.kim@ndsu.edu

Wuit Yi Lwin – wuit.lwin@ndsu.edu

Sandro Steinbach – sandro.steinbach@ndsu.edu