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The head of one of the world’s largest fertilizer companies has warned that increased tensions in the middle -east can cause a new shock of food price by efforts global supply chains for nutrients and energy.
Svein tore Holsether, Chief Executive of the Norwegian group Yara, said that fertilizer groups and customers are closely monitoring the risks around the Strait of Hormuz “, so that 40 percent of the world’s urea and 20 percent of the global LNG flows, warn that any disruption could be rid of world production.
Confirmation markets “have been extremely volatile for the past two weeks and it shows how connected everything is,” he told the Financial Times.
Holsether pointed to the recent closure of Israeli gas fields, which disturbed the production of fertilizers in Egypt, as a sign of how quickly regional tensions can wrinkle through supply chains.
Tensions between Iran and Israel escalated sharply this month and pushed Brent crude oil above $ 80 per barrel before he fell back to the high $ 60s after a cease -the fire was mediated earlier this week.
Industrial analysts have warned that more than one fifth of the world’s ureaout pit had stopped due to conflicts and delivery of disruptions. “Iran has closed all ammonia plants for safety reasons, while Egypt remains offline due to stopped Israeli gas flows,“ said Sylvia Traganida, senior ammonia editor at Consultancy ICIS.
Consultancy Cru warned the strikes of Israel about Iran and the retaliation attacks “introduced in large disruption of nitrogen markets” within a few days after the events and formed “continuous threats for phosphate, potas and sulfur stock from the region”.
Almost a third of the Urea export, 44 percent of the sulfur output and almost one fifth of the ammonia export continues or are produced in countries west of the Strait of Hormuz, according to data from Cru.
“The food system is fragile,” said Holsether. “If [energy prices] Stay high over time, that will also spill in the food system, such as in 2021 and in 2022 also with the outbreak of the war [in Ukraine]. ”
The last major disruption of fertilizers’ markets came in 2022, when the full invasion of Russia in Ukraine sent the natural gas prices and led a sharp rise in fertilizers costs, which contributed to a global food price crisis.
Since then, the prices for the nutrients of the crop had stopped as the natural gas market had fallen, but the European fertilizer industry remained under pressure when Russian import took a larger part of the market, said Holsether, when he returned from his first visit to Ukraine since the full -scale invasion of Russia in February 2022.
Although sanctions have processed the export of Russian natural gas, a critical input in nitrogen fertilizer, food and crop foods are exempt, so that Moscow can reduce its gas by the production of artificial fertilizer.
Holesther welcomed the recent EU step to impose rates on the Russian fertilizer, but called it too late. He said Europe had to prevent “repeating errors” made in energy import with food.
The Yara chef accused Moscow of arming of food and fertilizer, both by expanding the export of fertilizers to increase global dependence on his supply and by focusing on civil farming of Ukraine in a campaign to destroy the role of the country and one of the world’s agricultural power.
“There is military fight, but there is also a fight where food is used as a weapon,” said Holsether, adding that more than 20 percent of Ukraine’s agricultural land was now being mined, occupied or unusable.
Before the war, Ukraine’s food output, which included up to 50 million tonnes of grains, fed around 400 million people a year.
The grain and oil-load production of the country decreased from 78 million tons in 2023 to 72.9 million tons this year, said Holsether, as a result of the increasing impact of war on the country’s agricultural production.
