Strait of Hormuz shipping disruption has removed 2.7 million tons of fertilizer

UN mechanism to govern waterway stalls amid US-Iran gridlock

The monthslong conflict between Iran and the U.S. has curbed the flow of goods through the Strait of Hormuz, a waterway many countries rely on for imports of critical inputs like fertilizers and natural gas, ICC secretary-general John Denton said. Global attention has focused on the resulting rise in oil prices, but it is potential food shortages the world should be paying attention to, Denton said.

“People see this fundamentally through the prism of the battle between U.S. and Iran which is in a way theatrical, it is so overpowering,” Denton said. “The story which is the killer…is the fertilizer story.”

Denton, who sits on a United Nations task force attempting to broker a solution to unblock the Strait of Hormuz, said the monthslong disruption has cut available fertilizer capacity by nearly 40% and removed 2.7 million tons of fertilizer from the global market. About one-third of the world’s fertilizer shipments transit the narrow waterway, creating potentially catastrophic knock-on effects for agricultural producers far from the Middle East.

If no progress is made, prices of food staples will soar, with Denton estimating an increase of up to 80% in cereal prices.

Developing and emerging economies will absorb the hit first. Countries that import the bulk of their fertilizer — including the Philippines, which imports roughly 90% of what it uses — are particularly vulnerable to supply contraction and price spikes. The economic damage would extend through agricultural production, food prices, and consumer inflation in markets well beyond the immediate region.

The Hormuz crisis has been compounded by recurring disruptions in the Black Sea as Russia and Ukraine continue to launch attacks against each other, and by severe weather from the El Niño phenomenon, which is expected to disrupt harvests and drive up consumer inflation.

Denton sits on the U.N. Task Force for the Strait of Hormuz, a body working alongside U.N. agencies and the International Maritime Organization on a proposal that would temporarily hand governance of the waterway to the U.N. Secretary-General. The mechanism, proposed in July, would establish monitoring, inspections, maritime insurance, and protocols to facilitate safe, orderly transit through the shipping lane.

The ICC, an industry body that represents 45 million companies across more than 170 countries, has been working with the task force on the framework. Denton said the proposal has drawn support among U.N. member states, including Southeast Asian countries that depend on unimpeded Hormuz transit.

But the diplomatic mechanism remains stalled by the U.S.-Iran gridlock, Denton said, and that gridlock has not been resolved.

“We can’t deploy [the mechanism] because there has to be a political agreement by the U.S. and Iran,” Denton said. “At the moment…they’re not in a position politically to come to some arrangement.”

The stalemate leaves Denton’s food-security warning hanging over a diplomatic process that has not yet produced the conditions under which the proposed U.N. framework could be activated. Without a resolution, the fertilizer shock that has already cut global capacity by nearly 40% would, in his estimate, translate into cereal-price increases of up to 80% — a trajectory that would hit import-dependent economies first and ripple through global food markets thereafter.