Gulf Urea Behind Hormuz: How Much Supply Is at Risk and What Reopening Means

How much of the world's urea passes the Strait of Hormuz?

More than any other single route. Estimates differ by method, but they all point to the same order of magnitude. A UN analysis based on International Trade Centre (ITC) data says the strait carries about a third of globally traded urea ^[1]. Research cited by Fertilizer Daily puts the Gulf's share of seaborne urea exports at about 43% ^[2]. The International Food Policy Research Institute (IFPRI) estimates that Gulf countries supply roughly 40% of world urea exports, with Iran, Qatar and Saudi Arabia together holding about 21 MMT of annual export capacity ^[3].

The reason is simple economics. Urea is made from natural gas, and the Gulf has some of the cheapest gas in the world. Plants in Qatar, Saudi Arabia, Bahrain, Kuwait, the UAE and Iran were built for export, and almost all of them ship from ports inside the Gulf. When the strait closes, there is no pipeline alternative for a dry bulk product.

India is the most exposed buyer. IFPRI puts its imports at 8–10 MMT a year, nearly a fifth of the world total ^[3]. Brazil and Southeast Asia are the other large buyers that depend on Gulf granular urea, and IFPRI notes that, unlike India, they have no subsidy cushion, so they absorb most of the price adjustment ^[3].

How far did Gulf urea exports fall in 2026?

Very far, very fast. The military escalation began in late February 2026, and daily ship transits through the strait fell from an average of 103 in the last week of February to single digits within weeks ^[2]. In early March, Kpler counted 23 vessels loading or laden with fertiliser inside the Gulf, including about 530,200t of urea, with only one fertiliser carrier (a sulphur cargo) having left ^[4].

By April, the damage showed up in trade statistics. The ITC found that urea export volumes from the seven Hormuz-dependent economies were 83% lower than a year earlier, the second-steepest fall among 12 products after liquefied natural gas ^[1]. Exporters outside the Gulf raised shipments, but the ITC concluded that the extra supply fully replaced lost volumes only for ammonia and polypropylene, not for urea ^[2].

A ceasefire in June partly reopened flows, but renewed clashes in July kept traffic well below normal ^[2]. IFPRI's central scenario, published in May, assumed Gulf fertiliser trade would recover to about 50% of normal by August and 75% by early 2027 ^[3]. The evidence so far suggests recovery for urea has been slower than that.

How much urea is stuck inside the Gulf now?

Close to a million tonnes, depending on how it is counted. In late October, Argus estimated that seven vessels held about 390,000t of non-Iranian granular urea inside the Gulf, and, using Kpler data, counted at least 21 vessels carrying 919,000t of urea of all types and origins ^[5]. A separate estimate quoted in the same report put about 1 million tonnes afloat and more than 2 million tonnes of lost production, against normal Gulf exports of roughly 1 million tonnes a month ^[5]. The two vessel counts cover different scopes, and ships that switch off their transponders could mean the real figure is higher ^[5].

The pace of exit has been slow. The report noted that the last non-Iranian granular cargo to clear the strait sailed in mid-October, while a Qatari cargo of about 54,000t loaded at Mesaieed was only the sixth non-Iranian granular loading of the month ^[5]. These ship-level details come from Argus and Kpler reporting and have not been independently confirmed ^[5].

Security has not improved in November. On 7 and 8 November, both Iran and the United States reported vessels hit in or near the strait, and Reuters said it could not confirm the reported strikes ^[6]. US forces have blockaded movements to and from Iranian ports since April ^[6].

What does the disruption cost buyers?

Two things: a higher price for the urea itself and a higher cost of moving it.

On price, the World Bank's monthly Middle East urea benchmark rose from $472 a tonne in February 2026 to $856.9 in April, then fell back to $420 in October as demand weakened and China and other suppliers filled part of the gap ^[7]. Daily indicative assessments on 6 November put granular urea at $440 FOB Middle East, $517.50 FOB Egypt, $470 CFR Brazil and $341.50 FOB for Chinese prilled urea ^[8]. Egypt's premium reflects its own gas problems: producer Kima told the Egyptian Exchange its gas supply was cut by 20% from 1 November ^[9].

On logistics, war-risk insurance for hull and machinery rose from about 0.25% of vessel value before the conflict to roughly 7.5–10%, according to figures cited by Discovery Alert, although the Lloyd's Market Association says cover remains available ^[5]. That premium is paid per voyage, which adds a fixed cost to every Gulf cargo regardless of the urea price.

What would a reopening mean for urea prices?

Markets are already looking for one. On 9 November, Brent January futures fell 5.9% to $92.57 on hopes of a US–Iran deal ^[10]. Iraq said on 8 November that it had reached understandings with the United States to export crude through Hormuz using a lane near Oman ^[11]. Qatar's LNG traffic offers a partial test: Bloomberg and Kpler counted eleven laden Qatari LNG tankers leaving the strait in the ten days to 8 November, with crossing rates broadly steady for a month ^[12].

For urea, a reopening would have three effects. First, the backlog would move quickly: Kpler and Argus expect vessel queues to unwind fast once transit resumes ^[5]. Close to a million tonnes arriving in a few weeks would weigh on Brazilian and Southeast Asian prices in particular. Second, Gulf plants that cut output could restart, adding to supply over the following months ^[5]. Third, insurance would take longer to normalise: the ITC warned that full recovery could take months after hostilities stop, as insurers reassess war-risk cover and ports rebuild schedules ^[2].

There are also reasons for caution. The IFPRI analysis shows that export restrictions elsewhere matter as much as the strait: a severe tightening by China, Russia, Egypt or Indonesia could add about $134 a tonne to urea prices, while easing them could return urea to below pre-crisis levels by early 2027 ^[3]. A deal in the Gulf would therefore lower the floor, but national export policies would still decide how far prices fall.

What to watch

• Vessel exits. Whether granular urea cargoes from Qatar and Saudi Arabia start leaving the Gulf in larger numbers ^[5,12].
• US–Iran talks. A confirmed agreement, or a breakdown, will move freight, insurance and fertiliser prices together ^[10,11].
• War-risk premiums. A fall from the current 7.5–10% range would be the clearest sign that shipowners expect safe passage ^[5].
• India's next tender. The largest single buyer's next purchase will show how much Gulf product is offered for prompt shipment ^[3].
• Export policy elsewhere. China's and Russia's export decisions will shape how far prices fall if Gulf supply returns ^[3].

Alupetra follows urea, LNG and Gulf shipping from Istanbul, London and Dubai; Alupetra does not deal with sanctioned parties.