Overview
This week, the core topics of international institutions focused on the impact of geopolitical risks on commodity markets, especially the significant effect of disruptions in the Strait of Hormuz on the global fertilizer supply chain. The World Bank released its latest analysis, noting that the fertilizer price index rose by more than 12% quarter-on-quarter in the first quarter of 2026, and urea prices surged by 80% in April compared with February, reaching their highest level since April 2022. Although the current increase has not reached the extreme highs caused by the Russia-Ukraine conflict in 2021-2022, risks remain tilted to the upside. The market focus is on the persistence of supply disruptions, energy price pass-through, and the effectiveness of trade route adjustments. The key disagreement is whether the current production disruptions have been fully priced in, and whether new production capacity coming online in 2027 can ease tensions as scheduled. At the same time, export and production policies in countries such as India and China are also affecting market expectations.
Hot Topics of the Week
1. Impact of the Closure of the Strait of Hormuz on the Global Fertilizer Supply Chain
- Institution to watch: World Bank
- New information: The Middle East accounts for nearly one quarter of global fertilizer urea exports. Iran suspended ammonia production due to the conflict, Qatar suspended urea, ammonia, and sulfur production due to damaged facilities, and India reduced urea and ammonia output due to lower LNG supply.
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- Reason to track: The Strait of Hormuz is a chokepoint for global energy and fertilizer transportation, and its continued closure will directly affect fertilizer prices, food production costs, and even global inflation expectations.
2. Fertilizer Prices Hit a New High Since 2022
- Institution to watch: World Bank
- New information: In April 2026, urea prices exceeded USD 850 per ton, up 80% from February, and the fertilizer price index has surpassed its October 2022 peak.
- Link :
- Reason to track: Rising fertilizer prices directly push up agricultural production costs, may trigger global food security concerns, and feed through to food inflation data.
3. Three Major Buffering Factors Behind the Rise in Fertilizer Prices
- Institution to watch: World Bank
- New information: The World Bank noted that this price increase has not reproduced the extreme market conditions of 2021-2022, for reasons including: growers in the Northern Hemisphere have completed most of their fertilizer purchases, the rise in natural gas prices has been weaker than during the Russia-Ukraine conflict, and Middle East trade is bypassing the Strait of Hormuz through land corridors.
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- Reason to track: These buffering factors indicate that the transmission of the current shock is not indiscriminate and that there is an effective short-term ceiling on price fluctuations, but they also show that if energy prices continue to rise in the future, risks may accumulate rapidly.
4. Expected Price Pullback in 2027 Coexists with Upside Risks
- Institution to watch: World Bank
- New information: The World Bank expects the fertilizer price index to rise by more than 30% for the full year of 2026, then fall back in 2027 as exports recover and new capacity comes online, but if energy prices remain high and the Hormuz disruption continues beyond the third quarter, risks will remain tilted to the upside.
- Link :
- Reason to track: This forecast provides the market with a medium-term benchmark, but uncertainty comes from geopolitical dynamics, and the timeline of the disruption is worth continued tracking.
Quick Overview of Institutional Views
World Bank
- Released the fertilizer price index, showing a quarter-on-quarter increase of more than 12% in Q1 2026, the sixth increase in seven quarters. (Link: https://blogs.worldbank.org/en/opendata/fertilizer-prices-surge-as-strait-of-hormuz-disruptions-tighten-)
- Expects the fertilizer price index to rise by more than 30% for the full year of 2026, mainly driven by nitrogen and phosphate fertilizer costs and supported by resilient global demand. (Link: same as above)
- Noted that despite the recent price surge, the risk premium remains below 2021-2022 levels, as factors such as Northern Hemisphere purchasing rhythms, moderate natural gas price increases, and alternative trade routes provide buffers. (Link: same as above)
- Warned that if Hormuz-related disruptions continue beyond Q3 2026, combined with high energy prices, upside price risks will increase. (Link: same as above)
Perspective Analysis
Implications for Policymakers
The geopolitical risks in the Strait of Hormuz are spreading from the energy sector to fertilizer and food supply chains. Policymakers need to assess the appropriateness of strategic fertilizer reserves and measures to stabilize food prices. At the same time, supporting trade route diversification (such as land corridors) and accelerating the development of domestic or regional fertilizer production capacity have become short-term priorities for reducing external dependence. Upside risks to price expectations remind central banks to pay attention to second-round inflation effects, especially the pass-through from food costs to core inflation.
For Businesses and Investors
The surge in fertilizer prices directly squeezes agricultural profits. In particular, the impact is limited for Northern Hemisphere farmers who have already locked in fertilizer costs, but it creates cost pressure for the upcoming planting season in the Southern Hemisphere. Fertilizer producers face damaged capacity and high raw material costs (natural gas), but also benefit from profit elasticity brought by high prices. Investors need to watch the futures and spot price spreads for key products such as urea and ammonia, as well as changes in freight and insurance terms. Possible opportunities lie in logistics companies using land corridor detours and short-term demand growth for fertilizer substitute technologies (such as organic fertilizers).
Value for Researchers and Think Tanks
This event provides a new case for the "geopolitics-energy-transportation" transmission mechanism in commodity price formation. Researchers can compare the characteristics of the fertilizer price surge during the Russia-Ukraine conflict in 2021-2022 with the impact of the current Hormuz disruption, analyze the effectiveness of natural gas price buffering mechanisms and the response of producers' inventory cycles. In addition, quantitative research on trade route substitution (land corridors) and its effect on supply chain costs, as well as the actual implementation flexibility of new capacity commissioning schedules, are all directions worthy of deeper study.
Worth continuing to track next week
- Navigation status in the Strait of Hormuz and changes in the geopolitical situation: Watch for any signals of reopening or signs of conflict escalation, as this will directly determine the short-term direction of fertilizer prices. (Link: https://blogs.worldbank.org/en/opendata/fertilizer-prices-surge-as-strait-of-hormuz-disruptions-tighten-)
- Progress in restoring production capacity in major Middle Eastern fertilizer-producing countries (Iran, Qatar): Production disruptions are the core driver of the current price surge, making it crucial to review their recovery timelines. (Link: same as above)
- Dynamics of new fertilizer capacity coming online in 2027: The World Bank predicts that the price decline in 2027 depends on new capacity coming online, so it is necessary to track whether related projects proceed as scheduled. (Link: same as above)
- India's LNG supply and domestic urea production: India's production has been affected by the decline in LNG supply, and its recovery is relevant to the balance of the global urea market. (Link: same as above)
- Trends in China's fertilizer export policy: The World Bank mentions China's potential export restrictions as one of the market's concerns, so follow-up signals from Chinese regulators need to be monitored. (Link: same as above)