Around one third of global fertiliser shipments pass through the Strait of Hormuz, making its closure highly disruptive to supplies and a direct threat to international food security.
The problem is compounded by the use of natural gas to make fertilisers, since disruptions to liquefied natural gas (LNG) flows through the Strait of Hormuz drive up global gas prices and raise input costs.
In the latest update of its Fertiliser Price Index, the UN Food and Agriculture Organisation (FAO) reported that global agricultural input costs have surged by 22 per cent over the past two weeks.
An urgent notification warned that the continued disruption of navigation through the Strait of Hormuz coincides with peak demand for nitrogen fertilisers among farmers in the Northern Hemisphere for the spring season.
The FAO noted that shipment delays exceeding 14 days, whether due to rerouting around Africa or the suspension of insurance coverage, could lead to a potential decline in the production of key crops cultivated in the Northern Hemisphere, such as wheat and maize, by between five and eight per cent in some regions.
According to a report by the Agricultural Market Information System (AMIS) supported by the FAO, urea prices have reached their highest levels in two years following the withdrawal of Iranian and Gulf exports from the spot market.
This has triggered a wave of aggressive purchasing driven by concerns over a potential contraction in global urea imports.
Egypt’s fertiliser industry produces seven to eight million tons of nitrogenous fertilisers annually, with 40 to 50 per cent exported.
The closure of the Strait of Hormuz would cut off Gulf rivals such as Qatar, Oman, and the UAE from Asian and European markets, giving Egypt an opportunity to capture market share, according to experts.
Unlike Gulf producers, Egypt has direct shipping access to Europe and the Mediterranean, bypassing the Strait of Hormuz.
Nader Noureldin, an agricultural expert and former adviser to the FAO, said that Egypt’s fertiliser production is focused on liquid ammonia and nitrogen-based fertilisers. The importance of nitrogen fertilisers in agriculture lies in their ability to increase crop yields by between 30 and 50 per cent, he said. Their absence would affect production and global food security.
At the beginning of the Ukraine crisis, the Senegalese president visited Russia to request the exemption of African countries from restrictions on Russian fertiliser exports due to their strategic importance, Noureldin added.
The liquid ammonia Egypt produces is largely exported towards the US and Europe and is used in multiple industrial applications such as the plastics industry and the production of polyethylene-based materials.
In past episodes of reduced gas imports, the government has typically curtailed supplies to energy‑intensive fertiliser plants, eroding margins and weighing on their share performance.
Experts believe that the absence of disclosures by local listed fertiliser companies about cuts in supplies since the outbreak of the Iran war is a positive indicator.
Shares in Egyptian fertiliser companies have posted gains in tandem with the Strait of Hormuz crisis. Abu Qir Fertilisers shares rose by 11.8 per cent, while the Misr Fertilisers Production Company (MOPCO) recorded an 8.6 per cent increase in its share price.
“Wars affect economic conditions, with some sectors being negatively or positively affected,” said Ibrahim Al-Nemr, head of technical analysis at Naeem Brokerage.
“While the prevailing perception associates wars with adverse consequences, experience shows that each conflict may generate opportunities for specific sectors,” he added.
The US-Israeli war on Iran “has affected maritime navigation in the Arabian Gulf, particularly in the Strait of Hormuz, with negative repercussions for oil supplies, petrochemical inputs, and, by extension, the fertiliser sector, which is a heavy user of gas. This includes fertilisers produced in Gulf countries that rely on transit through the Strait of Hormuz for exports or imports,” he explained.
Companies dealing in nitrogen-based fertilisers have benefited from the current crisis, however, with urea prices increasing in global markets. Last week, Turkey suspended exports of urea fertilisers, and the price surge has bolstered the performance of Egyptian fertiliser companies specialising in nitrogen-based products.
Companies such as Abu Qir Fertilisers, MOPCO, and the Egyptian-Kuwaiti Holding Company have seen increases in their share prices, due to expectations of higher export volumes to offset declining shipments from other countries, particularly the Gulf.
Another factor has been the appreciation of the dollar against the pound, making the price of Egyptian fertilisers more attractive.
The benefit for Egyptian companies is owing to the doubling of the price of global urea prices and the growth in Egyptian exports. This means that Egypt is gaining ground as a competitor in the global fertiliser sector and it might be able to bridge part of the gap in global supply.
The appreciation of the dollar against the pound by over 10 per cent has further supported revenues, reflected in the rise in share prices.
Another promising opportunity for Egypt’s fertiliser sector lies in the fact that “more than 50 African countries import nitrogen-based fertilisers from Russia. If Egypt specialises in the production of this type of fertiliser, it can meet a larger share of global demand,” Al-Nemr said.
Egypt’s fertiliser companies adjust for higher gas input costs through close coordination with the government and operational adjustments. Since September 2025, they have been bound by protocols that set quotas for agriculture, local auctions, and exports, ensuring gas allocations are balanced between domestic needs and company interests.
Producers also negotiate regularly with ministries to soften the impact of price hikes, while adapting operations by trimming exports or adjusting production schedules when supplies tighten.
At the same time, they invest in efficiency upgrades to reduce gas intensity per ton of output. Their ownership structures, dominated by state entities like MOPCO and a mix of sovereign and private investors in Abu Qir, provide resilience, allowing government intervention and foreign capital support to cushion the sector against volatility.
Noureldin noted that the most promising opportunity at present lies in the production of nitrogen fertilisers, particularly to meet growing demand across African markets.
Egypt accounts for approximately four per cent of the global trade in nitrogen fertilisers. It is the largest producer and exporter of nitrogen fertilisers in Africa and the Eastern Mediterranean.
The sector’s exports exceeded $9.4 billion in value in 2025, said Khaled Abul-Makarem, chairman of the Export Council for Chemical Industries and Fertilisers, earlier this year.
With regard to the sector’s growth prospects in the light of the anticipated high returns associated with the war, Al-Nemr noted that most Egyptian fertiliser companies are relatively stable rather than high-growth firms.
Their profitability is closely tied to prevailing market conditions.
During favourable periods, profits rise and are positively reflected in share prices; at other times, these companies may come under pressure due to declining fertiliser prices, which decreases or diminishes profit margins.
This cyclical character is also reflected in expansion strategies. Rather than pursuing continuous expansion, the companies tend to prioritise financial stability, while maintaining a commitment to distributing a significant share of their profits to shareholders in the form of dividends, Al-Nemr said.
Dividend distributions at companies such as Abu Qir Fertilisers vary from one year to another in line with profits. The same applies to the Egyptian-Kuwaiti Holding Company, where dividend payouts increase in years marked by favourable conditions and decline during more challenging periods.
* A version of this article appears in print in the 26 March, 2026 edition of Al-Ahram Weekly
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