NASHVILLE, Tenn. (RFD NEWS) — Fertilizer and oil markets are seeing sharp swings this week as President Donald Trump weighs potential action involving Iran, including a deadline for reopening the Strait of Hormuz. The 48-hour deadline expires tonight at 8 p.m. Eastern, with energy traders closely watching how the situation unfolds.
“It looks like the market’s kind of pulling back, taking a wait-and-see attitude to what happens,” said trader Brian Hoops. “And if things escalate further, we can always add a little bit more premium, but it’s not just the gap and go type of mentality. It’s trading higher, pullbacks kind of stabilize into the middle of the week, and then add premiums again into the weekend if needed.”
Diesel prices are climbing toward record highs last seen in 2022, adding pressure at a critical time for agriculture.
“It’s a bad time of the year for the farmer to get hit with these higher fuel prices right now,” Hoops continued. “Fuel demand is going to surge here during the month of April and into May. And throughout the summer months, it’s going to be heavy. So you have a bad time of the year to have an increase in diesel prices. We’re also seeing an increase in fertilizer prices at this time frame, which may adjust some of the playing intentions as farmers actually get into the fields unless they believe that they can get nitrogen this summer at much cheaper prices.”
Heating oil has posted the largest gains, rising 110 percent year-over-year.
Fertilizer prices are also moving higher for farmers—often tracking the energy sector. According to DTN, four of the eight major fertilizer types are now seeing double-digit increases. Economists warn escalating tensions in the Middle East could further disrupt fertilizer markets.
Global markets remain under significant pressure as supply disruptions continue to build, pushing prices higher and tightening availability. Analysts point to ongoing conflict in the Middle East, the closure of the Strait of Hormuz, and reduced global production as key drivers.
“The Middle East is an important hub for nitrogen fertilizer,” says Dr. Michael Deliberto with the Fertilizer Institute. “Countries that are exposed to the disruption in that region account for about 49% of global urea exports, and about 30% of global ammonia exports, reflecting the concentration of fertilizer production and export capacity that we’re seeing in the Persian Gulf region right now.”
The Fertilizer Institute says more than half of U.S. farmers rely on domestic supplies, but those dependent on imports may face challenges in the weeks ahead.
The Strait has now been restricted for several weeks, limiting exports from major nitrogen-producing countries. At the same time, China has halted urea and phosphate exports, while European production remains below normal due to elevated natural gas costs. Additional pressure is coming from reduced production in India, where limited LNG supplies are cutting output. Russia’s nitrogen facilities have also been targeted in the ongoing war with Ukraine, further tightening global supply.
Demand is adding to the strain. India has entered the market with a large urea purchase tender, increasing competition for available supply. U.S. fertilizer prices, particularly at the Gulf, remain below global replacement levels but are rising quickly.
Meanwhile, several ag groups, including the National Corn Growers Association, are pushing to remove countervailing duties on Moroccan phosphate imports. The tariffs, first implemented in 2020 at the request of The Mosaic Company, are currently under review, with a final decision expected next spring.
