ByTheEast: What are the short and medium-term threats to countries in North Africa and in the Middle East, regarding their fertilizer supply and food security?
Dr. Frédéric Schenider: In the coming two to three months, the most acute pressure is on fertiliser availability and prices for the spring and early summer planting seasons. Egypt, Tunisia, Morocco, Jordan, and Iraq all rely to varying degrees on Gulf-sourced urea and phosphate fertilisers, and the Hormuz closure means that supply has effectively vanished from the regional market. Egyptian domestic agriculture – the Nile Delta, cotton and wheat production – is highly fertiliser-dependent, and the government’s already strained foreign exchange position makes it difficult to absorb the cost increases. Egypt is additionally caught in a fiscal predicament as Suez Canal revenue, which was already depressed by the Houthi Red Sea crisis, is under further pressure as shipping avoids the region altogether. Moreover, Egypt was already drawing on IMF support before the war now faces simultaneous shocks to its hard currency earnings and its food and input supply chains. The fiscal strains which the war puts on Gulf states will also constrain their financial backing of the Egyptian economy (which might paradoxically come as some relief to the Egyptian populace, who is not extremely fond of this dependency).
Lebanon is already in dire straits economically, politically, and socially with the Israeli invasion, large-scale bombing campaign, and mass expulsion of its Southern population. The country was already battered before the current war, and the hydrocarbon and fertiliser crises generated by the U.S.-Israeli war on Iran further exacerbate this issue. Lebanon’s agricultural sector has limited fertiliser storage and limited financial capacity to absorb higher prices, and the government is unable to activate emergency procurement mechanisms.
Jordan is somewhat more resilient institutionally – and is not currently being invaded – but is heavily import-dependent for food, and will feel the fertiliser cost pass-through sharply at the farm level over the coming months. This comes on top of the strains from the Iranian retaliation strikes on Jordan and the pressure from a West Bank under siege.
Yemen already suffers one of the worst humanitarian situations globally, and the current war exacerbates this situation further, especially as the situation remains unstable since the December-January clashes between Saudi- and Emirati-backed forces, and with the shadow of the full-scale entry of the Houthis into the current war.
BTE: What can the Arab States do to limit these impacts? Could we see the specter of food riots like those of 2007–2008 re-emerge?
FS: The medium-term outlook – three months to a year or two –, is dominated by two issues. First, the fertiliser shortage this spring will translate into lower crop yields at the next harvest, typically with a six-to-twelve-month lag. For North Africa and the Levant, which are net food importers in normal times, higher global food prices will arrive approximately when their fiscal buffers have been depleted by the crisis.
Second, if the war generates a global food price inflation episode – the World Food Program estimates an additional 45 million people worldwide could face acute food insecurity if the conflict continues into mid-2026 –, the fiscal cost of maintaining food subsidies for governments like Egypt’s or Tunisia’s becomes potentially unsustainable. Egypt spent $4-5 billion per year on food subsidies (and about $3 billion on fuel subsidies) even before this crisis, and the government will be at pains to afford the additional cost. Nonetheless, these subsidies are historically vital for Egypt’s political and social stability, and a combined fuel and food inflation could trigger renewed unrest. Tunisia’s government is already under severe fiscal stress. The combination of higher food prices and reduced ability to cushion them through subsidies is a medium-term threat, compounded by fractious domestic politics.
The countries that are structurally best positioned within the MENA region are those with some combination of hydrocarbon revenues – Iraq, Algeria –, alternative fertiliser supply relationships – Algeria has Russian supply options –, alternative land routes – Jordan, Iraq, Syria, Lebanon, Egypt, although those routes are limited in their capacity to substitute for the Strait traffic, the trucks are already piling up at the borders –, or strategic reserves. The most exposed are those with none of the above: Lebanon, Yemen, Sudan (already in civil war), Gaza, where the genocide is somewhat mitigated but far from over, the West Bank, and, despite its size, Egypt, if the Suez and tourism revenue interruption is extended.
“In contrast to the Strait blockage, infrastructure damage has a more lasting effect. Destruction varies by country. Generally, the smaller, more hydrocarbon-dependent states – Bahrain, Kuwait, Qatar – are structurally more exposed than the UAE or Saudi Arabia.”
BTE: The Gulf countries are currently facing an unprecedented and unforeseen crisis. In your opinion, what are their capabilities for dealing with the current crisis?
FS: The Gulf states are being hit through two overlapping channels: the effective closure of the Strait of Hormuz to commercial shipping, and direct physical damage to hydrocarbon and industrial infrastructure.
Blocking of the Strait of Hormuz has comprehensively disrupted hydrocarbon exports as well as downstream and byproducts. Roughly 43% of globally traded seaborne urea, 44% of seaborne sulphur, and over a quarter of global ammonia exports normally transit through it. Traffic is about 6% of prewar levels, and overland bypasses – Red Sea, Mediterranean – cannot replace this drop at scale or cost. Storage facilities are running out of capacity, forcing production cuts.
In contrast to the Strait blockage, infrastructure damage has a more lasting effect. Destruction varies by country. Generally, the smaller, more hydrocarbon-dependent states – Bahrain, Kuwait, Qatar – are structurally more exposed than the UAE or Saudi Arabia. Qatar has sustained a particularly heavy blow. The strike on Qatar Energy’s LNG facilities impacted the gas feedstock for the Qatar Fertiliser Company (QAFCO), which alone accounts for around 14% of global urea supply, now shut down under force majeure, as is Bahrain’s Bapco refinery. Saudi Arabia has been hit but it has access to the Red Sea via the Petroline and the Yanbu/Jeddah land corridor.
Generally, the pass-through on price depends on the supply and demand elasticities. In the current situation, I think that inelastic demand and a cost shock to the supply curve means that a significant portion of the cost is passed through and that producers cannot hold prices at pre-war levels for any sustained period. Gas feedstock costs are up sharply, especially in Europe, where Dutch TTF rose more than 50% in the first days of the conflict. Even where production continues, war-risk insurance premiums, logistics detours, and force majeure declarations from logistics providers are adding further cost. The urea price FOB Middle East rose by around 40–50% in three weeks, DAP prices at US Gulf ports were already above $655/t by early March. These price rises will persist and may intensify as inventories are drawn down; they will be felt most acutely at the next purchasing cycle, which for much of the Northern Hemisphere falls before the summer.
BTE: Saudi Arabia is a major player in the sector, both in the urea and phosphate industries. In your view, what is Saudi Arabia’s capacity to address the current crisis?
FS: Saudi Arabia has two advantages over its GCC neighbours, for two structural reasons. First, its exposure to direct Hormuz disruption is partially offset by its access to the Red Sea, and Ma’aden’s phosphate export logistics already had a significant Red Sea component. Second, Saudi Arabia’s diversified hydrocarbon asset base and the sheer scale of its infrastructure make it more shock-resistant than Bahrain or Qatar – a missile strike on Saudi infrastructure hits a smaller percentage of national infrastructure than a missile strike on Bahrain.
That said, the fertiliser industry is not unaffected. While production facilities have not been struck, feedstock supply is under strain: hydrocarbon production and logistics across the Peninsula are disrupted, and the pipeline and port routes face their own vulnerabilities — both the Petroline and the UAE’s Abu Dhabi-Fujairah pipeline have been threatened by Iranian strikes. Ma’aden has leaned into the Yanbu and Jeddah export corridor, but this cannot fully compensate for lost volume and imposes a cost premium on every tonne shipped.
For Ma’aden specifically, the commercial picture is mixed. The company had been executing one of the largest phosphate expansions in the world – a third fertiliser plant contracted in 2025 at $921 million, goal of 9 million tonnes of annual capacity by 2027. That expansion plan now looks complicated. On the one hand, the price environment has improved sharply for phosphate and DAP but logistics constraints imply low volume and capacity utilisation. What is more, Saudi Arabia was already running a structural deficit, requiring major downsizing of NEOM and PIF programmes even before the war. These fiscal constraints are growing because of the war, which limits the state’s ability to absorb prolonged disruption or underwrite relief measures for the industry.
BTE: Given the current crisis, Russia appears to hold a major advantage, as it produces all types of fertilizers (phosphate, nitrogen, and potash) and has access to all the necessary raw materials within its own territory (or in Belarus). Even amid the sanctions imposed following the invasion of Ukraine, the European Union has continued to import fertilizers from Russia. In your opinion, how will Russian fertilizer industry be able to capitalize on the current crisis?
FS: Russia is the world’s second-largest fertiliser exporter. Russia and Belarus make up around 40% of global potash exports, 23% of ammonia, and 14-16% of urea. And their logistics chains are unaffected by the war in the Gulf, exports flow through the Baltic, Black Sea, and Pacific. Feedstock is produced domestically, infrastructure is subsidised, and the government provides export financing.
Just as with hydrocarbons, Russia’s commercial opportunity is significant. Currently, an estimated 16 million tonnes of annual fertiliser capacity is trapped in the Gulf, meaning the market gap is enormous. West African importers – Nigeria, Ghana – are already pre-purchasing Russian fertilisers for the third quarter of 2026, a rational response to the disappearance of competing supply. Russia’s food and fertiliser exports are exempt from Western sanctions, which gives it full freedom to expand into these markets.
However, there are capacity limits on how quickly Russia can react to the demand surge. Domestic spring planting season creates competing demand, and Russia has already suspended export licences for ammonium nitrate until 21 April, and overall nitrogen fertiliser export caps have been in place since December 2021 through May 2026. Production cannot be ramped up quickly and new export-oriented capacity is not expected online before 2027. And while PhosAgro and Acron shares have risen modestly (3-4% on the Moscow Exchange since 28 February), the market appears to price in these constraints. The Ukraine War is another limiting factor, as Ukraine has hit not only Russian hydrocarbon infrastructure but fertiliser industry as well, in an attempt to cut off Russian export revenue. In particular, Ukrainian drone strikes hit Acron’s Dorogobuzh plant in Smolensk in February, knocking out about 11% of Russian ammonium nitrate capacity until at least May. In this context, it is noteworthy to remember the early days of the Ukraine War. Russia showed in 2022–23 that it uses fertiliser access as diplomatic leverage, particularly in Africa and the Global South, conditioning supply predictability on political alignment and favourable UN votes. The Carnegie Endowment notes that these client relationships, once established in a crisis, tend to outlast any ceasefire. The current war in the Gulf has undoubtedly increased Russia’s strategic leverage, complicating longer-term geoeconomics.
