Escalating tensions in the Middle East are exerting wide-ranging impacts on global energy markets and supply chains, including the fertiliser industry. 

Amid concerns over supply disruptions and surging input costs, Dr Phùng Hà, chairman of the Việt Nam Fertiliser Association, spoke to the Vietnam News Agency about the potential effects on the domestic market and measures to safeguard agricultural production.

How is the ongoing conflict in the Middle East affecting fertiliser prices and raw materials for domestic production?

The conflict is influencing supply and demand chains, raw material prices and a wide range of commodities, including fertilisers. However, the degree of impact depends largely on several factors, most importantly the scale and duration of the conflict.

I think that the most significant impact relates to supply chains. In particular, disruption at the Strait of Hormuz is a primary driver of rising fertiliser prices, as it is a critical shipping route for fertilisers and raw materials. 

If the strait were closed, supplies of sulphur and urea would be severely affected. Each month, about 1.2-1.5 million tonnes of urea, 1.5-1.8 million tonnes of sulphur and 400,000-500,000 tonnes of ammonia are transported through this route.

This disruption would have serious consequences for fertiliser production and supply chains. Ammonia is a key input for nitrogen-based fertilisers such as urea, MAP, DAP and SA. Sulphur is used to produce sulphuric acid, which in turn is essential for manufacturing DAP, SSP and SOP fertilisers.

Moreover, most very large ammonia carriers and bulk vessels transporting sulphur cannot easily be rerouted. There is effectively no maritime exit from the Gulf that bypasses the Strait of Hormuz. As a result, logistics costs would surge, including container rates (which could multiply several times), insurance premiums, fuel expenses and labour costs.

The outbreak of hostilities has also forced Iranian fertiliser producers to suspend urea and ammonia production. Urea plants in Egypt and Jordan have halted or reduced operations due to disrupted gas supplies from Israel.

The Middle East is the world’s largest urea-exporting region, shipping roughly 20 million tonnes annually. Iran alone produces around 5-6.5 million tonnes per year. Major Iranian producers include Pardis Petrochemical, Kermanshah and Shiraz. Iranian urea is exported to India and several Asian and African countries. Iran is also among the world’s leading ammonia producers, ranking sixth globally, supported by the world’s second-largest natural gas reserves.

Meanwhile, major fertiliser-producing countries in the region - where US forces are stationed - including Saudi Arabia (over 19 million tonnes annually), Qatar (5.5-6 million tonnes each year), the United Arab Emirates, Bahrain and Oman (around 2 million tonnes a year) could also be affected by retaliatory attacks from Iran.

What solutions are available to ensure adequate fertiliser supply for domestic agricultural production, given the impact of the Middle East conflict on Việt Nam’s fertiliser sector?

Some fertilisers in Việt Nam, such as urea and superphosphate, are currently in surplus relative to domestic demand. Fertiliser demand is seasonal and cyclical, typically peaking in the first and fourth quarters. 

To maintain stable operations, optimise plant capacity and manage inventories effectively, several companies have engaged in exports.

In the present context, fertiliser producers should continue maintaining stable production while prioritising domestic supply. 

At the same time, they should focus on reducing raw material and energy consumption, and accelerate research and development of enhanced efficiency fertilisers.

For end users, it is essential to follow the “four rights” principle in fertiliser application: right type, right dosage, right timing and right method. Farmers should also consider appropriate substitute fertilisers where feasible.

Many businesses have reported that even before the latest escalation, imported input materials such as sulphur had already risen 2.5 times compared to the beginning of 2025. What measures are needed to stabilise domestic fertiliser prices, given forecasts of continued input price increases?

Fertilisers vary widely in type, and each requires different raw materials. For example, natural gas and coal are key inputs for urea production, while apatite ore is used to manufacture phosphate fertilisers such as SSP, DAP and FMP.

As previously noted, the Middle East is a crucial global supplier of crude oil. When conflict breaks out, energy facilities across the region may suspend operations, and shipping through the Strait of Hormuz may be disrupted, pushing oil and gas prices sharply higher. 

In recent days, both oil and gas prices have surged, significantly affecting ammonia prices - an essential input for fertilisers including urea, DAP and SA.

Sulphur, the primary raw material for sulphuric acid production, is largely recovered during oil refining. The global sulphur market in 2025 has already experienced a period of sharp price volatility, driven by strong demand - particularly from the fertiliser sector - and supply shortages.

Following renewed tensions in late February 2026, sulphur prices have continued to climb. According to market research firm Argus, sulphur prices in China on February 27 stood at US$512-515 per tonne, rising sharply to $531 per tonne by March 2, with further increases forecast.

China is the world’s largest sulphur producer (18-19 million tonnes annually) and also its largest importer. In 2025, China imported approximately 9.61 million tonnes, including 3.82 million tonnes originating from the UAE, Saudi Arabia, Kuwait, Oman and Iran, accounting for nearly 40 per cent of global seaborne sulphur trade.

Prolonged instability in the Middle East is therefore causing sulphur shortages that affect not only China but also many other countries, including Việt Nam, as nearly half of seaborne sulphur originates from the region. 

While the scale of the conflict in June 2025 differed from the current situation, both episodes have had serious implications not only for regional security but also for global energy markets, supply chains and fertiliser markets, with significant consequences for the global economy.

Vietnamese enterprises have gained experience in responding to such challenges through several measures, including diversifying supply sources to mitigate risk; maintaining production while controlling costs at every stage; and reducing intermediary expenses. 

They also develop substitute products and invest in advanced technologies to improve production efficiency and reduce costs, even amid rising input prices. — VNS