The coverage of the Strait of Hormuz closure has been wall-to-wall energy.
Crude oil prices, natural gas futures, pump prices, strategic reserves.
All of it legitimate, all of it important. But there is another story moving through the same narrow passage that has received considerably less attention, and it ends not at the gas station but at the grocery store.
After the US and Israel attacked Iran in late February, it retaliated with drone strikes on commercial shipping in the Persian Gulf and declared the Strait of Hormuz closed. By early March, tanker traffic had dropped to near zero. Major shipping companies suspended transit through the corridor, and war-risk insurance was withdrawn, making commercial passage economically unviable.
The oil shock was immediate and visible. But to focus only on it misses something pretty major: The agricultural shock might be slower, less visible, and in some ways harder to reverse.
Modern agriculture runs on synthetic fertilizer. That’s all the nitrogen, phosphorus, and potassium that allow farmers to grow more food on the same land. Most of it is produced where natural gas is cheapest, which means the Persian Gulf, and then shipped in bulk to wherever crops are being grown. When the ships stop moving, the farms eventually feel it.
Just how much of this fertilizer is produced in the Persian Gulf? Roughly 43% of seaborne urea exports, approximately 44% of seaborne sulfur trade, and more than a quarter of global ammonia exports.
When the Strait closes, those shipments do not get rerouted. They stop. The fertilizer is physically trapped behind the chokepoint, and it has a near-immediate effect.
And the timing is particularly bad. Spring planting season for corn and soybeans in the Midwest is approaching, and farmers who have not yet locked in fertilizer prices are now staring at a very different cost structure than they anticipated.
The Strait of Hormuz is only 21 miles wide at its narrowest point. But in the end, it turns out that’s wide enough to fit your grocery bill through.