Who pays for the redistribution of the energy market, which began due to the war with Iran. Part 3

— The military conflict around Iran is turning the energy crisis into a raw material crisis: disruptions in the Strait of Hormuz are affecting not only oil and gas, but also the supply of fertilizers, food and industrial metals.

— Rising gas prices increase the cost of producing nitrogen fertilizers. If there are delays in their supply, the yield of some crops may drop by up to 50%.

— The Persian Gulf countries are almost entirely dependent on food imports — up to 90% of food is supplied from abroad. Disruptions in shipping pose the risk of a spike in food prices, even if goods are available on the global market.

— The energy crisis is spreading to metallurgy as well. The Gulf states produce about 10% of the world's aluminum, and energy and logistics disruptions are already causing supply problems.

— As a result, importers of raw materials and food pay the main bill. The final blow falls on consumers again.

If oil and gas hit the bills right away (we wrote about this in detail in the first two parts, here and here), then the fertilizer and metals market turns a military shock into a delayed blow to the food sector and industry. The current escalation around Iran is creating just such an effect: a significant part of the supply of carbamide and ammonia, on which about half of the world's food production depends, passes through the Strait of Hormuz. In 2022, when gas prices in Europe were approaching $4,000 per 1,000 cubic meters, 70% of ammonia production in the EU was stopped due to unprofitability. Then it directly affected the cost of the products. The current crisis repeats this scenario. Who will have to pay for the consequences in the end, Izvestia figured out.

The sixth bill is fertilizers and food

The Middle East is one of the world's largest fertilizer producers, and the Strait of Hormuz is an important shipping route for exports. 35% of the world's urea supplies and 45% of global sulfur exports pass through it, as well as significant volumes of ammonia, the main "ingredient" of nitrogen fertilizers. These are the basic components of the agricultural chain. The main exporters include Iran, Qatar, Saudi Arabia, and the United Arab Emirates.

Fertilizer prices have already risen sharply. Prices for granular urea in the Middle East have risen by about $130 to $650 per ton since February 27, the day before the United States and Israel launched a military campaign against Iran. European ammonia futures also accelerated: April contracts were trading at $725 dollars per ton, which is about $130 higher than the cost of March shipments.

The pressure on them is exerted by energy prices, which have risen sharply recently. An increase in the cost of natural gas, the main raw material for the production of nitrogen fertilizers, immediately leads to an increase in production costs. For example, in Europe, where gas is trading above $600 per 1,000 cubic meters, companies are forced to reduce production due to unprofitability. This step has already been announced by the Slovak manufacturer Duslo. As a result, the market becomes even more dependent on imports.

In the language of food, all this means not just an increase in the cost of a bag of fertilizers, but an increase in the cost of wheat, corn, soybeans, feed, followed by meat, milk and eggs.

Short-term gains are made by nitrogen fertilizer producers outside the Persian Gulf, who have gas and logistics are not blocked. This fully reflects the stock price of CF Industries, the world's largest ammonia producer, which rose by 14% on March 12, marking the largest intraday jump since 2020. The papers of the Canadian Nutrien and the Norwegian Yara International ASA are also growing.

However, if the conflict drags on, countries with their own cheap raw materials and production will benefit. Russia is in the first place in the supply of mineral fertilizers to the world market and controls about 20% of global supplies — in 2025, exports increased by 7% and reached 45 million tons. And the indicators are planned to increase.

At the same time, Russia will not be able to completely replace the Middle Eastern volumes. The country has established limits on the export of fertilizers — enterprises have obligations to supply them to the domestic market. In addition, their capacity is limited, including after the Ukrainian attacks, which targeted industrial complexes. And new export-oriented production facilities are planned to be commissioned no earlier than 2027. Another caveat is that although Western countries have not imposed sanctions on Russian fertilizer producers, the current restrictions force companies to solve problems related to paying for supplies and building logistics chains.

As a result, large importers — Brazil, India, part of Europe, and the United States - will receive increased bills. Farmers who start the season with more expensive fertilizers will pay first, followed by consumers.

Account seven — food logistics

The Persian Gulf countries are heavily dependent on food imports: they buy up to 90% of their products abroad. And most of the supplies go by sea. For example, container shipments of food and perishable goods go through the port of Jebel Ali in Dubai to at least four countries - the United Arab Emirates, Saudi Arabia, Bahrain and Qatar, where their final recipients are up to 50 million people.

Currently, many Middle Eastern states are cut off from food supplies due to the closure of the Strait of Hormuz. The situation may also affect countries located further from the coast — Yemen, Sudan and Somalia. For them, the UAE territory serves as a transit route. The risks of possible disruptions in the supply of products will logically lead to higher prices.

Iran has established its own food production, but the republic is heavily dependent on imports of wheat, corn, soybeans. Of the approximately 30 million tons of wheat that was imported to the countries of the region last year, about 14 million tons went to Iran. Before the outbreak of hostilities, Tehran reported strategic wheat reserves of 4 million tons. At the current consumption level, this may be enough for four months. At the same time, Iran has already banned the export of any food and agricultural products.

Suppliers are trying to find workarounds to continue working with the countries of the region, but their number is limited. Iran, in particular, is already receiving supplies by land, such as wheat from Russia and rice from Pakistan. Tehran can also use routes through the Caspian or Red Seas, but even so, it will be extremely difficult to compensate for the losses caused by the actual closure of the Strait of Hormuz. Saudi Arabia may transfer supplies to the Red Sea ports. The UAE, in theory, can begin to handle container shipments in Fujairah, that is, outside the Strait of Hormuz, but the infrastructure of this port is mainly designed for transshipment of oil, gas and fertilizers. Kuwait, Qatar and Bahrain have no alternative routes for large-tonnage vessels to approach, so they will have to rely only on land transportation.

As a result, even if food is available on the world market, its delivery to the region becomes more difficult and expensive. This will inevitably lead to higher prices. Richer countries, including Saudi Arabia and the United Arab Emirates, have opportunities to mitigate the price impact on the population. In extreme cases, they can afford to deliver high-cost goods by air (as Qatar did during the blockade in 2017). However, even there, the authorities are already taking measures aimed at preventing shortages of everyday goods. The population is urged not to buy them in order to create excess reserves.

As a result, the states of the region are the first to receive the bill for this crisis, having to spend more on purchases and subsidies. Then there are farmers and retail chains facing rising transportation costs.

The eighth bill is aluminum

The energy crisis is also affecting metallurgy. One of the most sensitive markets turned out to be aluminum, whose production directly depends on cheap electricity (in the Gulf countries, this model relies on gas generation). The largest factories in the Middle East are located in the UAE, Bahrain, Saudi Arabia and Qatar. In total, the countries of the region account for about 10% of global production. A significant part of aluminum exports there depends on shipping through Hormuz. Europe and the USA are among the main importers.

Several major manufacturers have declared force majeure on contracts. Among them is Aluminum Bahrain (Alba), one of the world's largest steel plants. Production in 2025 amounted to 1.6 million tons of aluminum.

Qatar's Qatalum, a joint venture between QatarEnergy and Norsk Hydro, temporarily halted production after the company stopped supplying gas. This week, she returned to work, but on a limited scale — production was reduced to 60% of the usual workload. The annual output of Qatalum is estimated at almost 650 thousand tons.

Emirates Global Aluminum, a leading aluminum producer in the UAE, reported delays in export shipments and advised that it could use reserves stored outside the region to fulfill its obligations to customers. In turn, the Rio Tinto group has withdrawn its offer to customers in Japan, providing for deliveries in the second quarter of this year.

Against this background, on March 3, orders for aluminum from warehouses monitored by the London Metal Exchange LME almost doubled to 86 thousand tons. This reflects problems with the supply of a key industrial metal, the world reserves of which are already close to historical lows.

In March, aluminum prices soared to $3.4 thousand per ton, and analysts warn that this is not the limit — they may rise to $4 thousand per ton. This affects the entire industrial chain. The largest consumers of metal are the transportation industry, the construction sector, and the packaging industry. They will receive the main bill for the rise in price of aluminum. But that's not all — rising metal prices increase the cost of a huge number of goods, from cars and airplanes to food containers and window frames.

In the short term, metal producers outside the conflict zone benefit from this situation. These are primarily companies from China, Canada, Australia, and Russia that can sell aluminum at higher global prices. Russia remains one of the largest producers: Rusal accounts for about 6% of global primary aluminum production. However, even for manufacturers, the benefits are limited. Sanctions and the rising cost of logistics reduce the potential profit.