Urea and nitrogen fertilizers: Gulf supply, gas costs and the 2026 price shock

Urea prices more than doubled in the first weeks of the 2026 war with Iran, from around $400 a tonne before the conflict to over $850 in April, according to the WTO and the World Bank, before falling back to $453 in June. Urea is the most traded nitrogen fertilizer, made from ammonia, which is itself made from natural gas. The Middle East, with cheap gas and export plants in Qatar, Saudi Arabia, the UAE, Iran and Oman, accounts for nearly a quarter of global urea exports on the World Bank's count and about 43% of seaborne urea exports on an NDSU analysis of Bloomberg data. Most of it leaves through the Strait of Hormuz.

The shock hit twice. Ships could not leave the Gulf, and plants stopped: QatarEnergy suspended urea, ammonia and sulfur production after damage to its facilities, Iran halted ammonia output, and India cut urea production because it received less LNG. CRU estimated in April that 55% to 60% of Middle East urea output had been halted. China, the other large exporter, tightened its export restrictions at the same time. Nitrogen is the fertilizer farmers can least afford to skip, because crops draw it down every season.

Key numbers

Estimates of the Gulf's share vary with the measure: the World Bank's quarter is of all urea exports, while the 40% to 45% figures used by NDSU and other analysts refer to seaborne trade only.

Supply: who produces nitrogen fertilizer

The cheapest producers are those with the cheapest gas. Brazil's National Fertilizer Plan, citing industry cost data, puts average urea production costs at about $48 a tonne in Nigeria, $54 in Canada, $58 in Russia, $75 in Algeria, $85 in Iran and $104 in Qatar, against $158 in China, $249 in India and $280 in Brazil. The main exporters are China, Russia, Oman, Qatar, the UAE, Iran, Egypt, Saudi Arabia, Nigeria and Algeria. China exports mainly to India and switches exports on and off to protect domestic prices.

Not every Gulf producer depends on Hormuz. Oman's large urea plants at Sur and Sohar sit on the Gulf of Oman, outside the strait. Qatar's QAFCO, Saudi Arabia's SABIC Agri-Nutrients and Ma'aden, the UAE's Fertiglobe and Iran's plants are inside it.

Demand: who imports it

India, Brazil, the United States, Australia and the European Union are the largest urea importers. India buys through government tenders and sets the tone for global prices. Brazil imported 7.7 million tonnes of urea in 2025, per Secex. See Brazil's fertilizer import dependence. The United States sources about 17% of its urea consumption from Gulf exporters, per NDSU.

Supply chain chokepoints

Gas. Ammonia plants run on gas as fuel and feedstock, so every gas price shock becomes a nitrogen price shock. When LNG supply fell in 2026, India and Bangladesh cut output. See natural gas and Qatar's LNG exports.

Hormuz. The single largest export route for urea, ammonia and sulfur, with no pipeline alternative for solid fertilizer.

Chinese export policy. Export quotas and inspections can remove millions of tonnes from the world market at short notice.

Sanctions. Russian and Belarusian fertilizer is not directly sanctioned, but payment, shipping and insurance restrictions shape where it can go.

Price dynamics

Urea is priced off regional benchmarks, such as granular urea free on board in Egypt and the Middle East, and follows gas prices with a short lag. The World Bank's fertilizer index reached its highest level since October 2022 in April 2026, and the Bank projected urea prices nearly 60% higher on average in 2026 before easing in 2027. Prices fell quickly after April because Iranian exports resumed and demand weakened, showing how fast the market reprices when even part of Gulf supply returns.

Historical disruptions

Companies and assets along the chain

Gulf producers. QAFCO (Qatar), SABIC Agri-Nutrients and Ma'aden (Saudi Arabia), Fertiglobe (UAE, ADNOC), OMIFCO (Oman) and Iranian state plants.

Global producers. Yara, CF Industries, Nutrien, EuroChem, Acron, OCI, Dangote (Nigeria) and India's IFFCO.

Importers and distributors. Indian state tender agencies, Brazilian distributors and blenders, and US cooperatives. This entry is descriptive: the encyclopedia does not publish recommendations.

What to watch

• Hormuz reopening and fertilizer vessel movements out of the Gulf.
• Indian urea tenders, the most important price signal in the market.
• Chinese export policy and customs inspections.
• Gas prices (TTF, JKM, Henry Hub), which set the cost floor for producers outside the Gulf.
• World Bank and WTO fertilizer price data.

FAQ

Why did urea prices rise in 2026? Because the closure of the Strait of Hormuz cut off Gulf exporters, which supply about a quarter of global urea exports and around 43% of seaborne trade. Qatar and Iran also halted production, and China tightened export curbs. Urea rose from about $400 a tonne to over $850 in April 2026.

Who are the largest urea exporters? China, Russia, Oman, Qatar, the UAE, Iran, Egypt, Saudi Arabia, Nigeria and Algeria. Gulf producers and Russia have the lowest costs because their gas is cheap.

What is the link between natural gas and fertilizer? Ammonia, the base of every nitrogen fertilizer, is made from natural gas, which is both the fuel and the feedstock. A rise in gas prices raises the cost of urea almost immediately, and gas shortages force plants to stop.

Are fertilizer prices back to normal? Urea fell back to about $453 a tonne in June 2026 as some Gulf supply returned, close to pre-war levels. But the Strait of Hormuz remains largely closed, Qatari production has not fully recovered and phosphate prices remain high, so the market stays sensitive to any new disruption.