Urea Prices Surge as Renewed Hormuz Blockade Strands 850,000 Tonnes of Fertilizer

Global urea markets have turned sharply higher in the second half of July 2026 after the collapse of the United States and Iran ceasefire pushed shipping through the Strait of Hormuz back into paralysis. An estimated 850,000 tonnes of urea are once again stranded across Iran and the Arab Gulf, including roughly 500,000 tonnes inside Iran, as loadings stop and vessel owners refuse to enter the region.

Urea prices climbed above 850 dollars per tonne in April, the highest level since 2022, before an interim deal in mid June allowed stranded cargoes to sail. The relief was visible in North America, where New Orleans barge values fell to about 350 dollars per short ton on 22 June, down from a wartime peak of 782 dollars.

President Donald Trump declared the ceasefire over on 8 July and confirmed the position on 10 July after Iranian forces fired on ships in the strait. The United States resumed its naval blockade of traffic to and from Iranian ports on 14 July and stepped up air strikes on coastal defence, missile and naval targets. A seven hour wave of strikes ended at 02:00 GMT on 15 July, according to United States Central Command. Iran's Revolutionary Guard responded by threatening to halt all energy exports from the region.

Commercial traffic tells the clearest story. Only six vessels transited the strait on Sunday 12 July, the lowest count in five weeks, and every one of them sailed with its automatic identification system switched off to avoid being targeted. Loaded ships are still willing to run the gauntlet outbound, but empty vessels are not going back in. That single behaviour is what turns a partial disruption into a supply failure, because without returning tonnage there is nothing to load at Gulf terminals whatever the official status of the waterway.

Prices reacted immediately. Egyptian values have gained 110 dollars per tonne, or 26 percent, since 6 July, while Algerian levels have risen close to 20 percent over the same period. North Africa led the move as traders rushed to cover short positions, and Brazil, New Orleans and Europe followed. New Orleans barges were back near 400 dollars per ton on 14 July. Higher natural gas costs, the main input for nitrogen production, added further support.

Two demand side factors will decide the next leg. China reopened its urea export window in June after an eight month suspension, issuing quotas for the June to August period, and any change to that policy can reset the market within weeks. India is the other swing factor. Its 8 June tender through National Fertilizers Limited was heavily oversubscribed and cleared near 445 dollars per tonne CFR, roughly half the April peak. A fresh Indian tender arriving while Gulf supply is blocked would tighten the balance quickly.

The Middle East is not the only pressure point. Continued drone attacks tied to the Russia and Ukraine conflict are creating uncertainty around Russian nitrogen output, while intensified strikes on Ukrainian port infrastructure have restricted grain exports and disrupted fertilizer shipments in the Black Sea.

The exposure is broad. Brazil imports almost all of its urea and routes up to 40 percent of it through Hormuz, with its main purchasing window opening in September. Sub Saharan Africa sources around 30 percent of its fertilizer from the Near East, and Pakistan and other South Asian importers depend on Gulf cargoes for wheat and rice seasons. Analysts had already flagged autumn 2026 as the earliest realistic normalisation window before the ceasefire collapsed, with pessimistic scenarios extending to 2028. Every additional week of blocked loadings now shifts the damage from the 2026 season into 2027 supply.