Middle East, Ukraine wars hit global fertilizer costs

URBANA, Ill. — Fertilizer shipment disruptions in the Persian Gulf due to the Iran conflict pushed prices to levels not seen since another war began four years ago.

The U.S. fertilizer industry utilizes both domestic production and imports to meet demand, with about 97% of potassium, 18% of nitrogen and 12% of phosphate imported.

Countries exposed to instability in the Persian Gulf account for nearly 49% of global trade urea exports and about 30% of ammonia exports. Iran, Qatar, Saudi Arabia and Egypt are major fertilizer exporters.

Large volumes of ammonia, urea, phosphate, sulfur and petroleum produced in Gulf countries are shipped through the Strait of Hormuz where shipping has been limited.

History Repeats Itself

The fragility of global fertilizer trade was last witnessed after Russia’s attack on Ukraine in 2022, which drove up prices over 50% from February to April that year.

Leading up to that ongoing war, fertilizer prices had been rising since late 2020 due to several factors. After a decline during the COVID lockdowns, fertilizer demand rebounded in late 2021 as restrictions were lifted and crop prices rose.

On the supply side during that period, increases in prices of natural gas — a key feedstock and energy source in fertilizer production — as well as some reductions in supply capacity also added upward pressure on prices.

The war in Ukraine drove prices dramatically higher due to uncertainties about its impact on fertilizer exports from Russia and Belarus, new or expanded economic sanctions on the two countries and disruptions in the Black Sea trade routes.

In 2020, Russia accounted for 14% of global trade in urea and 11% of trade in phosphate, while jointly Russia and Belarus accounted for 41% of global trade in potash.

Current Conditions

Nick Paulson, University of Illinois Gardner Hinderliter professor in farm management and U of I Department of Agricultural and Consumer Economics associate head, put the current conflict in the Persian Gulf and resulting prices into perspective in a farmdoc video.

Fertilizer prices were already increasing since the beginning of 2025. The conflict in Iran, closure of the Strait of Hormuz and associated impacts on the flow of goods from the Middle East have resulted in much sharper increases since the conflict began Feb. 27.

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

“Prices of nitrogen fertilizers in Illinois have all reached levels not seen since early- to mid-2023, but continue to remain below peaks reached during 2022,” he said.

The average anhydrous ammonia price in Illinois has increased to just over $1,123 per ton as of April 17. This is a more than 30% increase above price levels in late February prior to the conflict with Iran and 56% higher than anhydrous prices in Illinois at the start of 2025.

The average urea prices in Illinois reached just over $902 per ton as of April 17. This is an increase of 55% since the start of the conflict and a 68% increase since January 2025.

The average price of 28% liquid nitrogen solutions surpassed $523 per ton as of mid-April, an increase of more than 20% since the start of the conflict and 60% higher than early 2025.

Prices for phosphate fertilizer have also been on the rise.

“The average price of DAP in Illinois climbed above $866 per ton, nearly 5% higher than in February prior to the conflict and over 19% higher than January of 2025,” Paulson said.

“The average price of MAP has reached $894 per ton, 4% higher than prior to the start of the conflict and nearly 17% higher than early 2025.”

Similar to nitrogen products, phosphate fertilizers have reached average price levels not seen since 2023, but remain below the peaks reached in 2022.

The average potash price in Illinois is $505 per ton as of mid-April and increased 3% since the start of the Iran conflict, but has increased over 10% since the start of 2025.

Potash prices have returned to levels similar to those from mid-2023 through mid-2024, but remain well below the peak levels reached in 2022.

“Fertilizer price increases since the beginning of the Iran conflict will translate to smaller relative increases in total fertilizer costs for the 2026 crop as a portion of the fertilizers were purchased and applied prior to prices reaching their current highs,” Paulson said.

“Attention will eventually turn to the impact on the 2027 crop year, particularly if the conflict is ongoing and prices continue to rise into the fall.”

Fuel Costs

The average farm diesel price in Illinois reached nearly $4.60 per gallon as of April 17. This is more than 45% higher than prices in late February and nearly 60% higher than the beginning of 2025.

“In contrast to fertilizers, diesel fuel costs had remained on a downward trend from the highs in 2022, reaching averages near or below $3 per gallon from mid-2024 through 2025. Current prices remain below peak prices in 2022, but are back to levels not seen since that year,” Paulson said.

“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.”