With gas prices up 46% following the latest conflict in the Middle East, it is likely to be reflected in future fertiliser prices.
AHDB senior economist Jess Corsair notes that around 20% of the world’s gas and oil is shipped south of Iran and it is also a key route for urea trade. Although no sustained closure of key routes has occurred, insurance and freight costs remain exposed to escalation in the region.
“Volatility in the supply of oil, gas and urea across the Middle East region will tighten global supply and impact prices. QatarEnergy, which operates the world’s biggest liquified natural gas (LNG) plant, has halted production,” she says.
A sharp gas price spike would feed directly into nitrogen fertiliser production costs, potentially recreating rapid price escalation similar to that seen by the fallout from Russia’s invasion of Ukraine.
Simultaneously, oil price surges could lift diesel, plastics and logistics costs, while freight bottlenecks could constrain feed and input availability.
In this environment, UK agriculture would face simultaneous cost inflation, cash pressure and limited ability to pass costs through to consumers, creating acute margin stress across fertiliser-dependent cropping systems and feed-intensive livestock sectors in particular.
