Gulf conflict cuts 20% oil, fertilizer output

Iran’s closure of the Strait of Hormuz has turned one narrow waterway into a global choke point for oil, gas and fertilizer. (dallasfed.org) (congress.gov) The current crisis began after the United States and Israel launched military operations against Iran on February 28, 2026. Iran then declared the strait closed starting March 4 and threatened ships attempting to pass. (congress.gov) The Strait of Hormuz normally carries roughly 27% of the world’s maritime crude and petroleum trade and about 20% of global liquefied natural gas trade. When ships stop moving, exporters in the Gulf quickly run out of storage and have to cut production. (congress.gov) (dallasfed.org) Dallas Federal Reserve economists wrote that a complete halt in Gulf oil exports would remove close to 20% of global oil supplies from the market. They said Iraq and Kuwait started curtailing production in early March 2026. (dallasfed.org) Fertilizer moves through the same corridor, and the disruption is broader than farm chemicals alone. Rice University’s Baker Institute said the closure was blocking about 20% of global crude and liquefied natural gas trade while halting exports of petrochemicals, fertilizers and other industrial materials. (bakerinstitute.org) Carnegie Endowment estimated that about one-third of global seaborne fertilizer trade usually passes through Hormuz. It said the benchmark urea price had climbed about 30% in one month by March 12. (carnegieendowment.org) The Fertilizer Institute said nearly 50% of global urea exports and nearly 50% of global sulfur exports originate west of the strait and normally transit it. It also noted that 20% of the world’s liquefied natural gas passes through Hormuz, tying fertilizer costs to gas shortages. (tfi.org) Shipping has not snapped back even after ceasefire diplomacy. Reuters reported on April 21 that only three ships had passed through the waterway in the prior 24 hours. (msn.com) Insurance has been one reason. Reuters reported in early March that insurers including Gard, Skuld, NorthStandard, the London P&I Club and the American Club canceled war-risk cover for Gulf voyages, leaving tankers damaged, crews killed and about 150 ships stranded around Hormuz. (jpost.com) (insurancejournal.com) Even if diplomacy holds, the waterway may stay impaired for months. A Pentagon assessment shared with Congress said clearing mines from the strait could take six months, keeping oil and fertilizer markets tight well into 2026. (msn.com)