EuroOilWatch Special Report — how the energy shock is rewiring global food supply.
In July, EuroOilWatch's From Hormuz to the Checkout examined how disruption in the Middle East could move from energy and sulphur into fertiliser and ultimately European food prices.
Two months later, we know something important that we did not know then.
The worst physical fertiliser shortage has not materialised.
The Strait of Hormuz remains at a near-standstill rather than literally closed. EuroOilWatch's disruption board, drawing on IMF PortWatch data, shows Hormuz crossings averaging 5.3 vessels a day in the week to 13 September — about 6% of the 2023 baseline — with daily counts of 8, 2 and 8 on 11, 12 and 13 September. Those are visible AIS transits and therefore a floor on traffic, not a measure of total throughput.
Yet despite months of severe disruption to Gulf exports, global fertiliser trade has adapted far better than a simple supply-loss model would have predicted.
International Trade Centre data reported by the Financial Times on 15 September show urea imports from Gulf exporters falling by approximately 85%, while total global fertiliser imports fell by only around 6%. Egypt and Nigeria nearly doubled exports into some replacement markets, while Russia, China and the United States also increased their share of important trade flows.
That adjustment changes the central question.
The world found replacement fertiliser. It did not find cheap replacement fertiliser.
Urea prices were still around 70% higher year-on-year in the second quarter, according to the same FT analysis. The World Bank's September Pink Sheet shows fertiliser prices easing by 1.9% in August, but from levels already transformed by the shock.
EuroOilWatch's own public market series shows the same extraordinary journey. Egypt-linked urea moved above $850/t during the April shock, fell back towards roughly $385–400/t in mid-July, while the public CBOT-linked proxy was around $545 by 16 September. The proxy is indicative rather than a physical Egypt FOB assessment, but the trajectory captures the central fact: physical supply adapted much faster than affordability did.
The crisis has therefore migrated.
The question is increasingly no longer whether enough tonnes exist globally, but who can afford them, where they come from and how securely they can be delivered.
Europe sits on the expensive end of the nitrogen system
Nitrogen fertiliser begins with ammonia, and European ammonia begins overwhelmingly with natural gas.
The European Commission's Fertiliser Action Plan, COM(2026) 310, states in section 2.2 that natural gas accounts for 70–80% of nitrogen-fertiliser production costs. It describes European ammonia as being at the high end of the global production-cost curve and warns of a risk of further deindustrialisation if high input prices persist.
Part of that deindustrialisation has already happened.
Since 2023, plants representing 9% of EU ammonia-production capacity have permanently closed, while other fertiliser facilities have closed or remained dormant.
Europe now enters another difficult winter from an unusually weak gas position.
On 17 September European gas storage was around 69% full, compared with a five-year seasonal average of about 85%, while gas prices were close to €80/MWh and approximately 150% higher than a year earlier.
On 18 September, EuroOilWatch's own tracker recorded TTF at €76.35/MWh, after a weekly high of €82.57/MWh.
This matters twice.
High gas prices directly increase the cost of producing European ammonia today. Low storage also increases the possibility that a cold winter leaves Europe needing another aggressive refill campaign during 2027, extending expensive gas into the next fertiliser-production and agricultural cycle.
Gas security and fertiliser security are becoming increasingly difficult to separate.
Poland shows Europe's contradiction
Few companies illustrate this more clearly than Grupa Azoty.
Its Q2 2026 results show a 27% year-on-year decline in Agro sales volumes, attributed partly to lower production associated with planned maintenance shutdowns and changes in product mix. The company also described European fertiliser demand as moderate and affordability as a barrier for many farmers.
At the same time, average TTF spot gas during the quarter was €45.6/MWh, 28% higher year-on-year.
The geopolitical shock nevertheless increased the strategic value customers placed on European supply. Grupa Azoty reported a clear increase in European interest in stable local production, and its September half-year statement said companies were seeking secure local sources of supply in response to geopolitical uncertainty. Management also warned that Q3 conditions remained demanding because gas is a key cost driver in ammonia and nitrogen-fertiliser manufacturing.
That is Europe's central fertiliser paradox.
Domestic production becomes most valuable when international supply looks least secure.
But the same geopolitical conditions that increase its strategic value can make the gas required to run it prohibitively expensive.
Europe is not merely at risk of losing industrial capacity. Capacity has already been lost. The question is how much more becomes commercially difficult to justify before governments decide that retaining fertiliser production has a strategic value beyond the immediate market price.
Imports solve one problem and create another exposure
The EU already imports around 30% of its finished nitrogen fertilisers, 70% of its phosphatic fertilisers and around 40% of potassium fertilisers.
Upstream dependence is substantial as well.
In 2024, the EU imported approximately 2 million tonnes of ammonia, 5.9 million tonnes of urea and 6.7 million tonnes of nitrogen-based fertilisers and nitrogen-containing mixtures.
Europe's direct dependence on Middle Eastern fertiliser is comparatively small. The Commission puts the region at about 3% of EU ammonia imports and 1–2% of EU nitrogen-fertiliser imports.
But the Middle East represents roughly 35% of global nitrogen-fertiliser exports.
That explains why direct import exposure can be misleading.
Europe does not have to buy heavily from a disrupted producer to feel the shock. If buyers previously supplied from the Gulf begin bidding for Europe's existing suppliers, prices rise across the system.
The more useful question is therefore not simply:
Where does Europe buy its fertiliser?
It is:
Who else needs to buy from the same suppliers when a major exporting region becomes unavailable?
Europe is also reducing Russian dependence
That global reshuffling coincides with Europe's deliberate attempt to reduce dependence on Russian and Belarusian fertilisers.
Under Regulation (EU) 2025/1227, nitrogen fertilisers under CN 3102 originating in or exported from Russia or Belarus currently face the standard 6.5% tariff plus €60/t between 1 July 2026 and 30 June 2027.
Specified compound fertilisers face 6.5% plus €70/t.
From July 2027 those additions increase to €80/t and €95/t respectively.
There is also an accelerator mechanism.
If cumulative covered imports reach 1.8 million tonnes between July 2026 and June 2027, the Commission must impose the much higher final tariff levels on remaining imports in the period. The threshold falls to 900,000 tonnes for July 2027–June 2028.
Europe must therefore replace Russian tonnes while simultaneously coping with expensive domestic production.
Brussels has responded by suspending ordinary customs duties for one year on specified alternative ammonia, urea and nitrogen-fertiliser imports, subject to quotas and excluding Russia and Belarus. The quotas are based on 2024 most-favoured-nation imports plus 20% of 2024 imports from Russia and Belarus.
This is not incoherent policy.
It shows how narrow the path has become.
Europe wants less Russian dependence, viable European production and affordable fertiliser for farmers simultaneously.
Those objectives do not always point in the same direction.
CBAM sharpens the trade-off
Fertilisers have been inside the definitive EU Carbon Border Adjustment Mechanism since 1 January 2026.
Its purpose is straightforward: European producers already pay a carbon price, so imports should not receive an unlimited advantage simply because their emissions occurred outside the EU.
But imposing a carbon price on imports can also increase the delivered cost of fertiliser to European farmers.
That has produced a dispute over an emergency safeguard.
The Council's 12 June negotiating position retained conditions under which temporary exemptions could be used, while on 15 September the European Parliament voted to delete the proposed emergency-brake provision. The final rules now require negotiation between Parliament and the Council.
The underlying dilemma is economic rather than merely regulatory.
Without an effective carbon adjustment, European ammonia risks being undercut by more carbon-intensive foreign production.
Apply it fully during a severe international fertiliser shock and farmers can face more expensive imports.
There is no cost-free solution.
Phosphate is the quieter warning
Nitrogen attracts attention because its relationship with gas is immediate.
Phosphate may become the quieter vulnerability.
Europe imports approximately 70% of the phosphatic fertiliser it consumes.
China suspended DAP and MAP exports through August 2026. On 2 September, S&P Global reported in China DAP, MAP exports remain uncertain as September begins that producers had still received no official guidance on a resumption.
Market participants cited high sulphur costs, approaching winter stockbuilding and domestic demand as reasons meaningful exports might remain constrained.
This matters because the Middle Eastern disruption did not affect nitrogen alone.
It also hit sulphur, an essential input to phosphate-fertiliser production. S&P reported that sulphur costs had risen as the Hormuz disruption affected Middle Eastern trade.
Farmers faced with expensive inputs can protect nitrogen in the short term while reducing phosphorus or potassium where agronomically possible.
The Commission explicitly warns that this can have longer-term consequences for soil fertility.
Farmers become the balancing mechanism
Physical supply does not have to disappear for agriculture to be damaged.
Price can ration demand first.
By April 2026 EU nitrogen-fertiliser prices were 71% above their 2024 average. The World Bank meanwhile forecasts fertiliser prices to rise 31% in 2026, driven in particular by a roughly 60% rise in urea, before easing in 2027 under its central assumptions.
Those assumptions include recovering Middle Eastern exports and moderating energy costs.
Neither is guaranteed.
Europe is already paying to cushion the effect.
On 17 July EU member states endorsed €540 million in exceptional assistance for farmers affected by higher fertiliser and energy costs.
Poland's allocation is €66.633 million. Member states can supplement their EU allocations with national funding worth up to twice the EU amount.
The Commission's explanation is especially revealing: farmers are approaching difficult fertiliser and sowing decisions for the 2027 harvest.
That places the coming months at the centre of the risk window.
The first sign of further deterioration may not be an empty fertiliser warehouse.
It may be a farmer deciding that the expected crop return no longer justifies normal nutrient application.
That is the difficult scenario precisely because it produces no dramatic shortage headline.
The Sahel shows how price becomes physical access
In poorer and landlocked agricultural systems, the same global shock behaves differently.
Mali is an unusually stark example.
FAO's 6 August GIEWS brief says available fertiliser stocks cover only 22% of national requirements. It also reports that a blockade on fuel and other goods entering Bamako severely constrained farmers' access to inputs during the critical early stages of the growing season.
The same brief states that prices of urea, NPK and DAP increased by 19%, 16% and 8% respectively between February and March 2026.
Mali's food-security problem cannot be reduced to fertiliser.
Across Burkina Faso, Chad, Mali, Mauritania and Niger, FAO and WFP projected 9.1 million people to face Crisis-level acute food insecurity or worse during the June–August 2026 lean season. Conflict, insecurity, displacement, market disruption and restricted humanitarian access are major drivers.
But fertiliser and fuel can compound those pressures.
Mali, Burkina Faso and Niger are landlocked. Imported fertiliser has to move through long inland transport corridors, so fuel availability, storage infrastructure, road security and freight costs become part of the delivered fertiliser price.
Recent difficulties with Ghanaian fuel exports illustrate the logistics risk, although they should not be misread as evidence of a Ghanaian fuel shortage.
BOST Energies supplied Burkina Faso with 40,000 tonnes against 80,000 tonnes requested for July–August. It also supplied Mali during the period and faced additional Malian demand. BOST subsequently said the reduction in regional export capacity was largely caused by refurbishment of its Bolgatanga depot and explicitly denied that Ghana faced an imminent domestic shortage.
The mechanism nevertheless matters.
A tonne of urea sitting at a coastal terminal is not the same thing as a tonne positioned near a farmer in Mali before the application window closes.
Africa is also part of the replacement system
Africa is not merely vulnerable to the rearrangement of global fertiliser trade.
It is increasingly part of the solution.
Egypt and Nigeria have become more important replacement nitrogen exporters as Gulf flows have fallen.
There are also early signs of more deliberate regional procurement.
In Chad, a World Bank-financed programme implemented by UNOPS reported on 31 July that more than 150 tonnes of fertiliser had reached N'Djamena, another 150 tonnes were in transit and 460 tonnes more were on the way.
The important point is not the relatively small volume.
UNOPS says the fertiliser was deliberately sourced from regional suppliers in Africa to reduce exposure to international supply-chain disruption in the Middle East.
That is strategically significant.
Europe, African agricultural systems and major importers elsewhere increasingly have an interest in overlapping groups of replacement suppliers.
Brazil shows the same phenomenon at a very different scale.
It imported a record 45.5 million tonnes of fertiliser in 2025. After the Hormuz shock, StoneX estimated that urea prices delivered to Brazil jumped about 35% in two weeks, according to Reuters, while buyers increased their use of alternatives such as ammonium sulphate.
The issue is not that one region's imports automatically deprive another of supply.
Trade does not work that simply.
The issue is that when marginal supply becomes scarce, price increasingly determines where the next tonne goes.
Three paths through 2027
There is still a plausible benign outcome.
A mild European winter, recovering Middle Eastern fertiliser and LNG exports, lower gas and sulphur costs, additional nitrogen capacity and a meaningful resumption of Chinese phosphate exports could push fertiliser prices materially lower during 2027.
That broadly resembles the World Bank's central forecast, which expects fertiliser prices to ease next year as exports recover and additional supply enters the market.
The second path is less dramatic but arguably more important.
Physical fertiliser remains available, European ammonia stays structurally expensive, imports replace part of domestic production, governments continue supporting farmers and nutrient application remains constrained by crop economics.
Damage in that scenario appears gradually through farm margins, lower applications and weakening industrial capacity rather than through a sudden shortage.
The severe path combines a cold European winter and deeply depleted gas storage with continued Middle Eastern disruption, prolonged Chinese phosphate restrictions and further curtailment of European ammonia production.
Europe would then approach spring demand with expensive domestic production and expensive replacement imports simultaneously.
Current evidence does not establish that this outcome will occur.
It establishes that Europe has less margin for another major shock than headline global supply figures suggest.
The new fertiliser map
The global fertiliser system has passed a severe test without collapsing.
That is the good news.
But it survived by changing.
Alternative exporters expanded. European buyers sought replacement tonnes. Europe opened new import channels while increasing tariffs on Russian and Belarusian supply. European fertiliser production became more strategically valuable at the same moment its gas economics became more difficult. Farmers received emergency assistance. African countries began looking more deliberately toward regional suppliers.
The European Commission now treats fertiliser increasingly like a strategic commodity.
COM(2026) 310 calls for assessment of seasonal or minimum stocks, joint procurement and other preparedness instruments for key fertilisers and inputs. It also strengthens the Fertilisers Market Observatory, which the Commission describes as its main platform for market intelligence, price-data exchange and evidence gathering, including improved information on prices and stocks.
That tells us how far the issue has moved beyond an ordinary agricultural-input market.
The central risk for 2027 is no longer an inevitable worldwide fertiliser shortage.
It is a redistribution of vulnerability.
Fertiliser may exist, but increasingly at prices that favour countries, companies and farmers with stronger purchasing power, cheaper energy, better logistics or domestic production.
Europe faces a particular contradiction: it needs domestic fertiliser capacity more as global trade becomes unstable, yet its energy costs make that capacity increasingly difficult to maintain.
The Sahel shows what happens further down the resilience ladder, where high prices can combine with fuel, transport and security constraints until nominal global availability no longer guarantees local access.
The Hormuz shock therefore did not end the way a simple shortage model suggested.
It produced something more complex.
The world found replacement fertiliser.
It did not find cheap replacement fertiliser.
The most important question for the coming year is no longer simply how many tonnes are available.
It is at what price, from where — and for whom.