Africa and Asia are paying a high price for the Iran war

The Strait of Hormuz is a maritime chokepoint for 20 percent of the world’s crude oil and liquefied natural gas tanker traffic, but its role in the global nitrogen fertiliser trade is even more significant. More than half of all urea and ammonia produced and exported in the GCC comes from just three fertiliser plants along the Gulf’s southern coastline, in Qatar, Saudi Arabia and Abu Dhabi, adjacent to vast hubs for the processing of natural gas. These plants must ship all their exports via Hormuz, and natural gas – the main feedstock – accounts for 80 percent of nitrogen fertiliser production costs. That dependence turned catastrophic on March 3, when the Islamic Revolutionary Guard Corps (IRGC) launched a ballistic missile attack on two LNG trains at Qatar’s Ras Laffan – the world’s largest LNG and gas-to-liquids hub – crippling nearly 17 percent of the country’s production capacity. The strike was an act of war against a neighbouring GCC state that had tried to mediate an end to the US-Iran conflict. It also dealt a devastating blow to the adjacent Qafco urea mega-plant and, by extension, to the livelihoods of millions of rural farmers across India, Bangladesh and Africa, who have come to rely on cheap Qatari LNG under long-term contracts and steady urea shipments. If the wars in Iran and Ukraine continue, Indian food inflation could exceed the levels seen in 2022. Urea and ammonia imports from the GCC sustain crop yields across India and East Africa – boosting staple crops such as rice, maize, wheat, pulses and corn, as well as animal feed. With that single targeting decision, the IRGC generals may yet have condemned millions of the rural poor in war-ravaged Sudan and Somalia to a heightened risk of famine. The shock metastasised because it landed amid a perfect storm of other supply disruptions. On June 26 Ukrainian drones destroyed Russia’s largest nitrogen fertiliser complex in Tula Oblast. China, the world’s largest urea producer and exporter, capped its export quota at just 2 million tonnes a month for 2026. Violence between Iran and the US escalated through July, compounded by Houthi attacks on two Saudi oil tankers in the Red Sea and Ukrainian strikes on more than 100 Russian oil and LNG tankers in the Black Sea, which will only raise energy prices and prolong the pain. Double whammy The timing could hardly have been worse for South Asia. The collapse of Qatari fertiliser exports struck right in the middle of the spring kharif planting season – the main sowing period ahead of India’s monsoon rains – across India and East Africa. India’s farm belt then took a second hit when the southwest monsoon, which normally supplies 70 percent of the country’s annual rainfall, turned out to be unusually weak in June. It was a double whammy for India’s farmers in an economy where agriculture accounts for 18 percent of GDP and employs 45 percent of the workforce. Fertiliser plants in Gujarat and Maharashtra have either shut down or are running at just 60-70 percent capacity. New Delhi ordered Petronet LNG to replace lost Qatari volumes with costlier spot cargoes from the US, Nigeria and Algeria. Indian farmers are now facing a 40 to 60 percent rise in the cost of urea, ammonia and phosphates. If the wars in Iran and Ukraine continue, Indian food inflation could exceed the levels seen in 2022 – which is likely to push CPI above the Reserve Bank of India’s upper inflation limit of 5.1 percent in fiscal 2027. This would force fertiliser subsidies higher, drive up government bond yields, and push the central bank back towards monetary tightening. Prime minister Narendra Modi faces the most significant inflation shock since taking office in 2014. Further reading: Food security may be the next casualty of war UAE signs food security pact with Syria Green ammonia fails to gain from Hormuz fertiliser shock East Africa has been hit just as hard. Kenya and Ethiopia’s dependence on Qatari fertiliser imports, routed through the gateway ports of Mombasa and Djibouti, was exceptionally high. The disruption has affected more than 35 million small-scale farmers across countries where agriculture accounts for almost 40 percent of GDP. Both nations rely on long-distance truck fleets to move fertiliser from port to remote farms across Kenya and the Ethiopian Highlands – fleets now squeezed by a surge in diesel crack spreads following the Houthi attacks on Saudi tankers. With Brent crude nearing $100 a barrel and diesel near $160, many of these farmers can no longer afford fertiliser at all. The political stability of Kenya and Ethiopia – long seen as strategic priorities for Riyadh and Abu Dhabi – is hostage to a conflict that has spread to fertiliser supply chains and, ultimately, to food security. Africa is paying a high price for a war it did not start and cannot end.