Urea in 2026: An unfolding global crisis

While oil price fluctuations amid the volatile situation in the Strait of Hormuz make headlines, a quieter crisis is unfolding amid geopolitical flux. The price of Urea has surged to $700 per metric tonne, a 50 per cent increase due to the blockade of the Strait of Hormuz. Many countries are facing challenges due to disruptions in the supply of urea, a nitrogen-rich compound that is a core input for modern agriculture and industry. The world’s most widely used nitrogen fertiliser is urea. It is essential for crops like wheat, rice, and maize. It is cheap, easy to store, and is used by many countries as a fertiliser mix. The supply disruptions are affecting even large, diversified economies like the United States.
Chemically, urea, also called carbamide, is an organic compound with the formula CO(NH2)2. Urea has the highest nitrogen content, making it an effective nitrogen fertiliser. More than 90% of global production is used in agriculture, and disruptions to its supply could dramatically affect food output and security.
With an annual production of 50–60 million tonnes, or nearly one-third of the world's total, China is the world's biggest producer and consumer of urea. The global economy is immediately affected when Beijing tightens its export regulations. The gas-rich Middle East, particularly Qatar, Saudi Arabia, Iran, the United Arab Emirates, and Oman, accounts for a large portion of the exportable surplus outside of China.
Founded in 1969, Qatar Fertiliser Company (QAFCO) is the world’s largest single site urea producer and, in some years, has supplied around 14 to 15 per cent of globally traded urea. Iran, Saudi Arabia, and Qatar are among the region’s biggest producers, with the UAE and Oman adding significant additional capacity.
Russia is another major exporter, but its fertilisers now face heavy tariffs and de facto restrictions in markets such as the EU and the UK. India is one of the world’s largest urea producers, with annual output exceeding 20 million tonnes. Yet, it is also the largest importer, because domestic demand for subsidised fertiliser far exceeds domestic production.
Even the resource-rich United States, which produces millions of tonnes annually, still imports urea. According to trade data, the United States buys more than half of its urea from Canada, Qatar, and Russia combined. Saudi Arabia, Algeria, Nigeria, Oman, the United Arab Emirates, and a few smaller exporters provide additional substantial quantities. In other words, the same network of nitrogen supply that links Indian farmers to Gulf plants and Chinese policy decisions is also closely tied to American agriculture.
In China, agriculture accounts for 65 per cent of domestic use, and 30 to 35 per cent is consumed in industry. Historically, China has been a major ‘swing’ producer because it can quickly increase or decrease its production at relatively low cost. Because of its stability and flexibility, its decision to curb exports could have either stabilising or destabilising effects on the market. China has recently reduced urea exports, mainly to protect its agricultural sector and ensure food security for its people amid high energy costs and environmental pressures.
At the same time, the US-Iran war and the closure of the Strait of Hormuz have choked fertiliser shipments as one-third of the world's seaborne fertiliser and 40% of global urea exports pass through this single chokepoint. The situation is further exacerbated by Qatar Energy's decision to halt downstream production at the giant QAFCO complex. All these geopolitical and logistical escalations come at a time when import-dependent countries prepare for their peak planting season.
This is not a story of urea fertiliser, an obscure chemical; it is a story of the global food system, a critical industrial input, and inflation. The entanglement of the narrow sea lanes in sanctions, tariffs, and export bans reflects the global supply chain's dependency, fragility, and vulnerability. It is projected that global urea consumption growth will outpace capacity growth in several years, keeping the supply-demand balance tight. In the future, the big importers must diversify their sources and invest in developing alternative fertilisers, or the fertiliser story will become a food security crisis for millions.