Market and product

The role of the Strait of Hormuz is rapidly expanding, as not only oil and gas but also fertilizers—core inputs for global agriculture—are being drawn into a vortex of risk. As a result, a chain reaction is forming, with global food prices as the eventual endpoint. As an agricultural country, Vietnam cannot avoid the impact of this “shock.”

Hormuz and the “Blind Spot” of the Fertilizer Supply Chain

According to the International Fertilizer Association (FIA), the Middle East plays a pivotal role in fertilizer trade. In 2024, Iran, Qatar, Saudi Arabia, the UAE, and Bahrain together accounted for 23% of global ammonia trade, 34% of urea trade, and 18% of ammonium phosphate trade. Across the broader region, the Middle East supplies nearly 30% of the world’s major fertilizer exports.

Urea—the most widely traded nitrogen fertilizer—is particularly vulnerable. In 2024, nearly 18.5 million tons of urea were exported through the Strait of Hormuz. Any prolonged disruption to shipping along this corridor would quickly trigger severe consequences for global fertilizer markets.

The phosphate supply chain is also closely tied to Hormuz. About 18% of global trade in ammoniated phosphates passes through the strait, while nearly half of global sulphur trade moves along this route. Sulphur is a key raw material in phosphate fertilizer production, meaning disruptions could affect the entire phosphate value chain.

When Hormuz is disrupted, the impact extends beyond transport routes. The fertilizer industry is deeply linked to energy, particularly natural gas. Many countries, especially in Asia, rely on imported liquefied natural gas (LNG) to operate domestic fertilizer plants. Nitrogen fertilizers are produced from ammonia, which depends heavily on natural gas both as a hydrogen feedstock and as an energy source, according to the FIA.

Thus, a shock in Hormuz disrupts the LNG market, which in turn drives fertilizer production costs even higher.

Supply Chain Disruption Risks and Impact on Food Prices

Another critical link in the supply chain is China, often described as the “OPEC of the fertilizer market,” controlling 44% of global phosphate, 30% of nitrogen, and 23% of sulphur supply, according to the Vietnam Commodity Exchange. To respond to the Hormuz crisis and protect its domestic planting season, Beijing has instructed exporters to halt shipments and release national fertilizer reserves 15 days earlier than usual. This tightening of exports has pushed major importing countries such as India and Southeast Asian nations into severe shortages.

On Wall Street, JPMorgan analysts estimate that the world holds only about 25 days of strategic fertilizer reserves before real impacts begin to damage agricultural production capacity. If the strait closes, storage tanks in Gulf countries could fill within less than a month, forcing large industrial complexes to shut down. Restarting these complex chemical plants can take 4–6 weeks, creating a severe supply lag that could paralyze input markets in the medium term—even after the conflict ends.

Speaking at a discussion on “Global Implications of the 2026 Middle East Conflict for Agriculture and Food,” published by the FAO earlier this week, Máximo Torero, Chief Economist of the UN Food and Agriculture Organization, stated that rising input costs such as energy and fertilizers will push up prices of key staples like wheat, rice, and corn. If the conflict lasts more than three months, the impact will intensify due to effects on the next planting season. If it extends beyond six months, it could slow global economic growth, affecting both developed and developing countries.

Vietnam Adapts Amid Shared Risks

According to the Vietnam Commodity Exchange, by mid-March 2026, all eight major fertilizer categories had recorded sharp price increases. Global urea prices reached $674/ton, while DAP rose to $851/ton.

In 2025, Vietnam imported 6.19 million tons of fertilizers worth $2.19 billion. Notably, China was the largest supplier, accounting for 48% of total imports (2.99 million tons). Therefore, China’s export restrictions in 2026 have placed direct pressure on Vietnam’s market.

Domestically, as recorded by KTSG Online in mid-March, urea prices reached nearly VND 900,000 per 50kg bag, with some dealers selling at VND 950,000—an increase of VND 200,000–250,000 compared to late February. This brings prices close to the record levels seen during the COVID-19 period (around VND 1–1.05 million per 50kg bag).

Despite these pressures, Vietnam retains a “buffer” in its ability to be fully self-sufficient in urea. Major producers such as Phu My Fertilizer and Ca Mau Fertilizer use domestic natural gas as feedstock, helping shield the local agricultural sector from the global LNG price surge. Some large enterprises also proactively imported and stockpiled significant volumes of DAP, potash, and organic fertilizers as early as Q4 2025. Thanks to this forward-looking strategy, the domestic market has been able to maintain supply for the Winter-Spring crop and prepare for the Summer-Autumn 2026 season, helping farmers avoid the “money but no goods” situation seen in many other countries.

In the context of physical supply disruptions, financial derivatives are becoming strategic hedging tools for importing businesses. The Vietnam Commodity Exchange notes that many companies have actively taken long positions in futures markets to lock in input costs as soon as geopolitical risks emerged. These hedging strategies allow firms to separate price volatility risk from supply disruption risk. In cases where shipments are delayed due to logistical disruptions, profits from financial positions can offset rising spot prices, thereby stabilizing profit margins and limiting spillover effects on domestic prices.