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Beyond Barrels: How the Middle East Crisis Is Rewiring Global Supply Chains for Fertilizers, Gases, and Critical Materials

  • 2 hours ago
  • 10 min read

Enerdealers Editorial




A Chokepoint Crisis That Goes Far Beyond Oil


The closure of the Strait of Hormuz and the widening conflict around Iran have been framed, understandably, as an energy story. Around a fifth of global oil and roughly a quarter of LNG flows normally transit this narrow corridor, with Asia in particular absorbing close to 90% of the crude volumes that pass through. But for decision makers in the energy sector, the more strategic risk now emerging lies in the non‑energy commodities that move through the same routes: fertilizers, sulphur, helium, and industrial gases that underpin food systems, high‑tech manufacturing, and healthcare worldwide.


What began as a shock to oil and gas markets has rapidly morphed into a broader supply chain crisis. About a third of the world’s traded urea and up to half of global sulphur exports are linked to Gulf producers and seaborne routes that are now severely constrained. Qatar alone normally supplies roughly one‑third of global helium, a niche market with almost no spare capacity elsewhere. The result is a cascade of second‑order effects that are hitting Asia first, but are now propagating into Europe and Latin America through fertilizer prices, food inflation, and tighter availability of critical inputs.


For energy executives, traders, and policymakers, this crisis is not only about securing molecules of oil and gas. It is about understanding how energy‑linked by‑products and Gulf‑centric fertilizer chains shape agricultural resilience, industrial competitiveness, and even the pace of the energy transition across key consuming regions.


Gulf producers sit at the heart of global nitrogen and phosphate fertilizer supply due to abundant gas feedstock and integrated downstream complexes.


The Hidden Backbone: Fertilizers, Sulphur, and Helium


Gulf producers sit at the heart of global nitrogen and phosphate fertilizer supply due to abundant gas feedstock and integrated downstream complexes. Five key exporters in the region account for over a third of global urea trade and nearly a quarter of ammonia, while also contributing close to one‑fifth of phosphate fertilizer production. These flows are inseparable from the energy system: sulphur is largely recovered from oil and gas processing, while ammonia and urea are gas‑intensive products whose economics are tightly coupled to regional gas prices and export logistics.


The current conflict has squeezed this system on several fronts. Shipping through Hormuz has been reduced to a trickle, with some estimates suggesting 25–30% of global nitrogen fertilizer exports are now at risk or delayed. Urea and sulphur prices have already spiked, with some benchmarks reporting increases of 30–35% since hostilities escalated, and sulphur trades discussed above 800 USD/mt in worst‑case scenarios. For buyers east of Suez, the problem is less about absolute availability today and more about forward visibility: tenders are being delayed, shipment windows renegotiated, and insurers are pricing in elevated war‑risk premia.


Helium illustrates the structural vulnerability even more starkly. Qatar’s Ras Laffan Industrial City is a central hub for helium production, tied directly into LNG processing. With operations disrupted by attacks and constrained export routes, market participants warn that more than a quarter of global helium supply could be jeopardized if Hormuz remains effectively closed. In a market already prone to periodic shortages, this shock is rippling through semiconductor manufacturing, MRI operations, aerospace, and advanced research facilities worldwide.


These are not peripheral sectors. They are core to how economies grow, digitize, and decarbonize. The exposure, however, is not uniform. It plays out differently in Asia, Europe, Afdrica and Latin America —and requires region‑specific responses.


Gulf producers sit at the heart of global nitrogen and phosphate fertilizer supply due to abundant gas feedstock and integrated downstream complexes.


Asia: From Energy Shock to Food and Tech Risk


Asia remains the epicentre of the immediate fallout because of its outsized dependence on Gulf energy and related by‑products. Japan and other Northeast Asian economies still source the vast majority of their crude from the Middle East, and even before the conflict escalated, analysts warned that around 89% of the crude transiting Hormuz ultimately landed in Asian markets. What is becoming clearer now is how deeply fertilizer and helium disruptions are feeding into Asia’s food systems and high‑tech manufacturing base.


On the agricultural side, many Asian economies are structurally short of fertilizer and rely heavily on imports. Recent estimates suggest that about one‑third of globally traded urea and roughly 35% of seaborne urea volumes originate in the Middle East, with a significant share moving east of Suez. India, Southeast Asia, and parts of East Asia are now watching tender calendars and shipping schedules as closely as oil traders track OPEC output. In some crop systems, such as palm oil in Southeast Asia, research indicates that a 50% reduction in fertilizer use can cut yields by up to 40%—a stark reminder that the shock is not just a price story, but a productivity and food‑security risk.


Industrial and tech sectors are equally exposed. Qatar’s helium output is critical for chip fabrication plants across Northeast Asia, where helium is used in cooling, leak detection, and specific etching processes that cannot be easily substituted. Shortages are already translating into higher costs and, in some cases, production rescheduling for semiconductor and advanced electronics manufacturers, with knock‑on effects on global supply for everything from consumer electronics to electric vehicles. MRI facilities and research labs across the region are also reporting concerns about helium allocation and pricing.


In response, Asian governments and companies are deploying a mix of demand‑side and supply‑side measures. Recent reporting highlights measures ranging from reduced operating hours and energy‑saving campaigns to accelerated efforts to diversify LNG and crude sourcing from the US, Africa, and within Asia. For fertilizers and gases, strategies include:


  • Drawing down strategic fertilizer and industrial gas inventories where they exist.

  • Renegotiating long‑term contracts to improve flexibility on origin and routing.

  • Exploring barters or linked deals that bundle energy and non‑energy commodities.


For energy decision makers in Asia, the lesson is clear: risk assessments and contingency plans must now explicitly include non‑fuel commodities that are tightly integrated into Gulf‑centric energy value chains.


Europe: A Fertilizer Shock on Top of an Energy Hangover


Europe enters this crisis still digesting the aftershocks of the 2021–2023 energy crunch, when Russian gas disruptions forced a painful and rapid reshaping of its energy mix. While the current Middle East conflict has not yet produced the same level of direct gas scarcity for Europe, it is amplifying a parallel fertilizer crisis and reviving concerns around sulphur and other raw materials sourced from the Gulf.


European agriculture is highly dependent on nitrogen and phosphate fertilizers, yet domestic production capacity has been challenged by high gas prices and environmental constraints. Imports from the Middle East, North Africa, and the former Soviet space have become increasingly important. As Gulf supplies falter, traders and farmers have turned back to Russian fertilizers in larger volumes, despite sanctions and additional EU tariffs. Eastern European countries such as Poland, Bulgaria, and the Baltic states—already major agricultural players—have historically imported substantial quantities from Russia and are now recalibrating their sourcing mix under conditions of higher geopolitical risk.


Beyond immediate price spikes, European industry is increasingly worried about access to sulphur and other by‑products of oil and gas processing from the Gulf. The Federation of German Industries has warned that a lasting loss of Gulf‑origin sulphur would hit European fertilizer production and various chemical value chains. In turn, this could undermine food security not just in Europe, but also in regions that rely on European fertilizer exports, including parts of Africa and the Middle East itself.


For European energy and industrial players, the key challenges are threefold:


  • Managing a double exposure—to both Middle Eastern by‑products and Russian fertilizers—at a time of heightened sanctions risk and regulatory scrutiny.

  • Balancing decarbonization commitments with the need to run carbon‑intensive ammonia and fertilizer assets harder to offset import uncertainty.

  • Coordinating with policymakers on targeted support, from temporary tariff adjustments to strategic stockpiling and demand‑management mechanisms.


The crisis is forcing Europe to revisit its assumptions about “diversification” built after the Russian gas shock. It is no longer enough to diversify energy sources alone; diversification must now encompass the linked fertilizers and chemical feedstocks that quietly underpin European food systems and industrial output.


The Middle East crisis has collapsed the perceived boundary between “energy” and “non‑energy” commodities. Oil, gas, fertilizers, sulphur, helium, and industrial gases.


Africa: Fertilizer Shock and Food Security Risks


African economies are being squeezed by the Middle East crisis on several fronts, despite not being the main buyers of Gulf oil. Many countries are highly dependent on imported fertilizers, especially urea and phosphate products, whose availability and pricing are closely linked to Middle Eastern supply.


When sulphur and ammonia flows from the Gulf tighten, African importers face higher costs and longer lead times, which can quickly reduce application rates at farm level and pressure already fragile food security.


Governments then confront rising subsidy bills or the difficult choice to scale back fertilizer support programs. Currency depreciation in several African economies further amplifies the impact of dollar‑denominated fertilizer and fuel imports, widening the input affordability gap between African farmers and producers in wealthier regions.



Latin America: Import‑Dependent Agriculture in the Crosshairs


Latin America’s role as a major exporter of grains, oilseeds, and meat makes it central to global food security—and particularly sensitive to fertilizer shocks. While the region is rich in land and, in some cases, energy resources, it is structurally dependent on imported nitrogen fertilizers, including urea and ammonia produced in the Middle East.


Recent industry estimates show that the largest agricultural producers in Latin America imported essentially all of their urea needs in 2025, with around 41% of those volumes passing through the Strait of Hormuz. Even though direct, on‑paper purchases from Iran are relatively modest, traders suggest that as much as 1.3–1.4 million tons of Iranian fertilizer may reach the region each year through intermediaries and third‑country routings. This leaves Latin American buyers acutely exposed both to outright disruptions and to changes in the enforcement or scope of sanctions.


The Middle East exports an estimated 22 million tons of urea annually—about 40% of global trade—and losing even part of that flow would significantly tighten the global nitrogen balance. Latin American buyers would then find themselves competing more aggressively with Asian importers for alternative supply from Russia, Egypt, North Africa, and, to a lesser extent, North America. Price signals are already visible: higher CFR values for key ports, increased freight rates, and wider bid‑offer spreads as traders factor in routing risks.


If the current disruption persists into the main fertilizer application windows in Brazil, Argentina, and other major producers, yield risks will rise. Reduced or delayed application of nitrogen can quickly translate into lower output for soy, corn, and wheat, with knock‑on effects on global prices and food import bills worldwide. For Latin American policymakers and energy‑sector actors, the crisis is also prompting renewed interest in:


  • Scaling local nitrogen production where gas resources and policy frameworks allow.

  • Structuring long‑term offtake agreements that bundle energy, fertilizer, and possibly green ammonia.

  • Coordinating logistics and storage investments to build more robust fertilizer supply chains independent of single chokepoints.


In short, while Latin America is geographically distant from Hormuz, its agricultural model is tightly coupled to Gulf‑linked nitrogen flows. That makes the region an indirect but highly exposed casualty of the current crisis.


Strategic Implications for Energy Decision Makers


For decision makers, the key message is that the Middle East crisis has collapsed the perceived boundary between “energy” and “non‑energy” commodities. Oil, gas, fertilizers, sulphur, helium, and industrial gases are part of a single, interdependent system centred on hydrocarbon extraction, processing, and export infrastructure in and around the Gulf. A disruption in one segment rapidly propagates across the others, with region‑specific manifestations in Asia, Europe, and Latin America.


Several strategic implications stand out:


  1. Risk management must be multi‑commodity and value‑chain based. Traditional risk frameworks that focus on oil and gas volumes alone are no longer sufficient. Companies need integrated views of how disruptions in gas feedstock, sulphur recovery, or helium processing impact downstream customers in agriculture, chemicals, electronics, and healthcare.

  2. Chokepoint exposure is the new core metric. The share of a company’s or country’s imports that transit through Hormuz—and other maritime bottlenecks—should be tracked for fertilizers, gases, and chemical feedstocks as rigorously as for crude and LNG. This includes indirect exposure via traders and intermediaries.

  3. Diversification strategies must extend beyond suppliers to include routes and molecules. For fertilizers, that means considering alternative origins (e.g., Russia, Egypt, North America), alternative products (e.g., shifting nutrient balances or using enhanced‑efficiency fertilizers), and, where feasible, accelerating domestic or regional production, including low‑carbon ammonia projects. For helium and specialty gases, it implies long‑term contracts with non‑Gulf producers, recovery and recycling technologies, and more stringent allocation protocols.

  4. Policy coordination is now a competitive differentiator. Governments that can align energy security, agricultural policy, and industrial strategy will be better positioned. Tools include strategic stockpiles not only of fuels but also of fertilizers and critical gases; flexible tariff and sanctions regimes that can respond to acute shortages; and targeted support for domestic production where it is economically and environmentally viable.

  5. The energy transition is both a risk and part of the solution. High gas prices and supply uncertainty can encourage efficiency, agronomic best practices, and the adoption of lower‑input farming methods, but they can also slow down investments in low‑carbon technologies if capital is diverted to short‑term crisis management. Strategic planning should therefore integrate resilience and decarbonization rather than treating them as competing priorities.


Conclusion: From Crisis Response to Structural Resilience


The current Middle East crisis has exposed how deeply the global economy depends on a relatively small set of energy‑related export platforms for far more than just oil and gas. Fertilizers, sulphur, helium, and other industrial inputs that quietly enable food production, digitalization, and healthcare have emerged as critical fault lines in Asia, Europe, and Latin America alike.


In Asia, the shock is tightening the link between energy security, food security, and technological competitiveness, as fertilizer and helium shortages threaten crops and chip production. In Europe, it is layering a fertilizer and chemical raw‑material crunch on top of an unresolved energy hangover, forcing difficult choices between reliance on Gulf and Russian supply. In Latin America, it is testing the resilience of an export‑driven agricultural model that rests on imported nitrogen routed through one of the world’s most fragile maritime corridors.


The task ahead is to move from reactive crisis management to proactive, structural resilience. That means embedding multi‑commodity risk perspectives into corporate strategy, rethinking diversification to include fertilizers and critical gases, and working with policymakers and customers to redesign supply chains around robustness rather than just cost optimisation.


The immediate priority is to manage the dislocation. The longer‑term opportunity lies in building a new architecture of energy and commodity security—one that recognizes that the real strategic asset is not only a barrel of oil or an MMBtu of gas, but the interlinked flows of molecules and materials that keep fields productive, fabs running, and societies functioning.








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