Farm Input Costs Rise Amid Middle East Unrest

Middle East Tensions May Disrupt Fuel and Fertilizer Supplies

The Strait of Hormuz, a key energy trade route, is at the centre of geopolitical tensions between Iran and Israel. In June 2025, Iran's parliament voted to close the strait after military strikes, threatening global flows of fuel and fertilizer.

This narrow waterway, just 21 miles wide, carries over 14 million barrels of petroleum daily. Though the U.S. imports little oil from the region, global oil prices impact U.S. farm diesel and nitrogen fertilizer costs.

Fertilizer markets are just as vulnerable. Qatar, Saudi Arabia, and Iran supplied a quarter of global nitrogen fertilizer in 2024. The region, including Egypt and Bahrain, supports over one-third of the nitrogen trade.

The U.S. imports 25% of its fertilizer, including 39% of its phosphate from Saudi Arabia and over 10% from Israel, Egypt, and Jordan.

These disruptions influence prices quickly. U.S. Gulf urea futures rose 7% in June, while UAN-32 climbed nearly 10% in May. Similar spikes occurred during previous global crises, affecting farm budgets and planting strategies.

Although Gulf trade is a small share of U.S. ag exports—$3.7 billion in 2024—the region is a key market for almonds, soybean meal, dairy, and cotton. Delays or higher freight costs could shift buyers to other global suppliers.

“In a global system where pennies on the bushel can determine export success, even remote tensions can ripple into the realities at the American farm gate,” the report states.

With fertilizer retailers now offering lower seasonal prices, producers face a narrow window to secure inputs before volatility returns. Keeping an eye on these tensions will help farmers plan more effectively amid changing global dynamics.