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War in Iran could have serious consequences for food production around the world, because the Middle East is home to some of the world's largest fertilizer factories, as well as a major producer of the raw materials needed to make fertilizer.
According to Morningstar, about 25-35 percent of global trade in these commodities passes through the Strait of Hormuz, the narrow waterway surrounded by Iran on one side and which is virtually closed to ships. Iran is also the fourth-largest global exporter of urea, a widely used fertilizer, after Russia, Egypt and Saudi Arabia, with Saudi exports also affected by the closure of the strait.
Prices for Egyptian urea, an industry benchmark, have risen by more than a third since the start of the conflict in Iran, according to CRU Group, a data provider. Prices for sulfur, used in fertilizers, have also risen. Nearly half of global sulfur exports come from Middle Eastern countries, CRU Group said.
Attacks on energy infrastructure in the region, which have already prompted major producer Qatar to cut production of natural gas, which is essential for the production of fertilizers and their inputs, could further reduce supply.
"The Strait of Hormuz is essential for global food production. Fertilizers are not just another commodity, nearly half of global food production depends on them ," Svein Tore Holsether, CEO of Norwegian chemical company Yara International, told CNN last week.
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