Iran, Fertilizer, Diesel Fuel, and a farmdoc Webinar
A series of targeted strikes on critical oil and natural gas facilities across the Middle East has ignited fears of a global supply chain crisis, threatening both worldwide energy stability and the spring agricultural planting season.
During the middle of March, Iranian forces launched attacks against a Saudi Arabian oil facility on the Red Sea and oil facilities in the United Arab Emirates. In a separate, direct retaliation for an earlier Israeli raid on the South Pars gas field, Iran also attacked a critical natural gas complex in Qatar. The South Pars field—operated jointly by Qatar and Iran—is vital to Tehran, supplying 90% of Iran’s domestic electricity as well as crucial heating and cooking gas.
The broader Iranian strikes were aimed at nations in the Gulf Cooperation Council (GCC). According to Susan Ziadeh, a former U.S. Ambassador to Qatar and current Senior Advisor at the Center for Strategic and International Studies in Washington, D.C., the targets in Saudi Arabia and the UAE were highly strategic.
Among the facilities hit was SAMREF, a Saudi Aramco refinery jointly owned with ExxonMobil located in Yanbu on the Red Sea, as well as port facilities in Fujairah in the UAE.
“Yanbu is on the Red Sea, and that’s at the end of the East-West pipeline, which was designed to get around the problems of the Strait of Hormuz and shipping out of the Strait of Hormuz,” Ziadeh explained in a recent interview with PBS NewsHour. “So, in essence, the Iranians have hit ‘Plan B’ by hitting Yanbu.” Tankers have subsequently been unable to fill up at the port of Fujairah due to the strikes.
The Qatari “Lifeline” and the Global Fertilizer Chokepoint
Perhaps the most economically devastating blow was the retaliatory Iranian strike on Ras Laffan in Qatar. The $26 billion complex features 14 production facilities and is considered the economic lifeline of the country. Roughly 20% of the world’s liquefied natural gas (LNG) exits the Strait of Hormuz from Qatar, drawing from the highly productive Qatari side of the South Pars field.
The raid reduced Qatar’s LNG export capacity by an estimated 17% and damaged the world’s largest gas-to-liquid (GTL) facility, operated by Shell. Shell has since halted production of diesel, jet, and marine fuels at the site. Experts estimate it will take three to five years to rebuild the damaged LNG infrastructure.
Beyond fuel, the disruption at Ras Laffan has triggered an immediate crisis in global agriculture and technology. The LNG produced there is a critical component in manufacturing helium—used in medical imaging and semiconductors—and nitrogen-based fertilizers like ammonia and urea. Following the attacks, Qatar Energy was forced to shut down the world’s largest urea plant.
The American Farm Bureau Federation (AFBF) notes that the Persian Gulf region accounts for nearly 49% of global urea exports and roughly 30% of global ammonia exports. Qatar alone is the world’s fourth-largest exporter of nitrogen fertilizers.
The Agricultural Ripple Effect
The economic reaction to the shutdowns has been severe. Urea export prices in the Middle East surged by roughly 40% almost immediately, jumping from under $500 to over $700 per metric ton.
While the United States produces more than 80% of its own nitrogen, the AFBF notes that the U.S. still imports 18% of its nitrogen, alongside 97% of its potassium and 13% of its phosphate. Because agriculture operates on a highly interconnected global network, U.S. fertilizer prices have already spiked.
Furthermore, countries heavily reliant on Qatari LNG, such as India, have been forced to cut output at their own domestic urea plants due to the sudden lack of gas supply. Analysts warn that if the conflict drags on, nitrogen fertilizer prices could double, inevitably translating into higher global food costs.
The timing of this disruption is critical, as it coincides directly with the spring planting season in the Northern Hemisphere.
“This conflict obviously is having an immediate impact on fuel and fertilizer prices,” said Gary Schnitkey, an Agricultural Economist at the University of Illinois. “We now see anhydrous ammonia over $900 a ton. Anhydrous ammonia and all the fertilizers were going up before this, but the conflict has increased that increase.”
Complicating matters further are reports that China—one of the world’s largest fertilizer exporters, shipping more than $13 billion worth last year—may move to reduce its exports to protect its domestic supplies. Such a move would put an immense additional strain on already panicked global markets.
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Upcoming Webinar on Market Impacts To help farmers and agricultural professionals navigate the fallout, the farmdoc team at the University of Illinois will host a free webinar on Thursday, March 26 at 11:00 a.m. CT.
University of Illinois Agricultural Economists Gary Schnitkey and Nick Paulson will be joined by Gretchen Koch of the National Corn Growers Association, who will provide insight into the geopolitics of the crisis, and Chuck Spencer from Growmark.
“It will be a good discussion,” Schnitkey noted. “I don’t know if we will resolve anything at that point in time, but it will be a good discussion.”
Participants can join the discussion live or watch the recording afterward by visiting farmdocDaily.illinois.edu and navigating to the “Events and Webinars” tab.