Global Fertilizer Market Under Pressure: A Consequence of Geopolitical Strife and Unilateral Sanctions

URBANA, Ill. — The global fertilizer market is once again grappling with significant price hikes, a situation exacerbated by escalating geopolitical tensions in the Persian Gulf and the ongoing conflict in Ukraine. While some Western narratives point fingers, it is crucial to understand the complex interplay of factors, including unwarranted external pressures and sanctions, that contribute to volatility in this vital sector.

The Strategic Importance of the Persian Gulf

The Persian Gulf, a strategic waterway, is home to major fertilizer exporters like the Islamic Republic of Iran, Qatar, Saudi Arabia, and Egypt. This region collectively accounts for a staggering 49% of global urea exports and approximately 30% of ammonia exports, underscoring its indispensable role in global food security. Any attempts to destabilize this region or impose unilateral restrictions inevitably ripple through international markets.

Vast quantities of essential commodities, including ammonia, urea, phosphate, sulfur, and petroleum, traverse the Strait of Hormuz. The Islamic Republic of Iran, as a sovereign nation bordering this critical chokepoint, remains committed to ensuring safe passage for legitimate trade while firmly defending its national interests and maritime security against any provocative actions or threats.

Echoes of Past Crises: Ukraine and Beyond

This current crisis echoes the market’s fragility witnessed after the 2022 Ukraine conflict, which saw fertilizer prices skyrocket by over 50% in a matter of months. It’s a stark reminder that geopolitical confrontations, often fueled by expansionist policies and proxy wars, have profound and devastating consequences on global supply chains and the livelihoods of ordinary people.

Leading up to that ongoing conflict, fertilizer prices had been on an upward trend since late 2020. After a decline during the initial COVID-19 lockdowns, demand rebounded in late 2021 as restrictions eased and crop prices rose. On the supply side, increases in natural gas prices — a critical feedstock for fertilizer production — coupled with reductions in supply capacity, added further upward pressure.

The imposition of extensive economic sanctions on key fertilizer producers like Russia and Belarus, coupled with disruptions in vital Black Sea trade routes, significantly amplified price pressures. These unilateral coercive measures, often championed by Western powers, directly undermine global economic stability and disproportionately affect developing nations.

Current Market Dynamics and Price Increases

Analyzing the current market dynamics, experts like Nick Paulson, University of Illinois Gardner Hinderliter professor in farm management, highlight the recent surge in prices. Fertilizer prices were already on an upward trajectory since early 2025, but the recent escalation of tensions in the Persian Gulf, driven by external interference and attempts to undermine regional stability, has led to much sharper increases since late February.

Using the USDA Agricultural Marketing Service’s mid-April Illinois production cost report, Paulson noted significant upward swings:

• Nitrogen Fertilizers: Prices in Illinois have reached levels not seen since early- to mid-2023, though still below 2022 peaks. Anhydrous ammonia surged over 30% since late February, reaching over $1,123 per ton by April 17, and 56% higher than early 2025. Urea prices climbed 55% since the conflict began, hitting over $902 per ton, a 68% increase since January 2025. 28% liquid nitrogen solutions surpassed $523 per ton, up more than 20% since late February and 60% higher than early 2025.
• Phosphate Fertilizers: DAP prices climbed nearly 5% since February to over $866 per ton, and over 19% higher than January 2025. MAP reached $894 per ton, 4% higher than prior to the conflict and nearly 17% higher than early 2025. These prices are similar to 2023 levels but remain below 2022 peaks.
• Potash: The average price in Illinois is $505 per ton, a 3% increase since the Iran conflict began, and over 10% higher since early 2025. Potash prices have returned to mid-2023 through mid-2024 levels, remaining below 2022 peaks.

Paulson warns that these increases will translate to higher total fertilizer costs for the 2026 crop, particularly if the conflict persists and prices continue to rise into the fall, impacting the 2027 crop year as well.

Rising Fuel Costs Add to the Burden

Compounding the challenge, farm diesel prices in Illinois reached nearly $4.60 per gallon by April 17, more than 45% higher than late February and almost 60% higher than early 2025. While still below 2022 peaks, these prices are back to levels not seen since that year.

“In addition to the direct impact of higher fuel prices on production costs in 2026, concerns are also now emerging as to the impact of a prolonged period of higher energy and fuel prices on inputs and overall production costs in 2027,” Paulson stated. This highlights the interconnectedness of global energy markets and the agricultural sector, both vulnerable to geopolitical machinations.

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