By
51 min ago 2 min read
The Middle East crisis has removed around half a million tonnes of nitrogen fertiliser production from global markets.
Svein Tore Holsether, Chief Executive of Yara, disclosed the amount in a recent interview – saying it could impact up to 10 billion meals a week.
The blockage of the Strait of Hormuz disrupts roughly one-third of globally traded urea, as well as other , including natural gas, ammonia, phosphates and sulphur.
The supply shock led to an immediate product shortage in global markets, forcing demand to adjust accordingly through sharply increased global fertiliser prices. In turn, global food commodity prices increased 2.4% in March and could rise as high as 10%.
“Developments in the Middle East put significant pressure on the global food system, with knock on effects across the value chain and growing challenges for farmer affordability,” added Holsether.
“This volatility highlights how fragile the food system is, and why resilient fertiliser supply chains and a strong farming community are essential. Fertilisers play a critical role in food security, and Yara remains focused on upholding production and deliveries.”
The crisis is creating increased food insecurity, from Lebanon to south Sudan, according to the UN World Development Programme. It says sub-Saharan Africa and Asia are the most vulnerable due to a reliance on food and fuel imports.
It estimates 45 million more people could fall into acute food insecurity if the conflict does not end by the middle of the year, and if oil prices remain above $100 a barrel.
Air Products is pressing ahead produced at the 2.2GW NEOM green hydrogen project to Yara, as the Middle East conflict potentially makes the molecule competitive with fossil-based ammonia.
CEO Eduardo Menezes told investors during the industrial gas major’s Q2 earnings call that current ammonia price shocks were likely to be a “temporary effect” but could underline calls to disconnect production from natural gas.
Yara reported $327m net income in Q1, up $32m year-on-year, buoyed by increased nitrogen margins.
