Hormuz crisis rewrites global LPG and fertiliser trade

The Strait of Hormuz remains effectively closed more than five months after the U.S.-Israeli air war on Iran began in late February 2026, and the prolonged disruption is now reshaping global trade flows for commodities from liquefied petroleum gas to fertiliser.wikipedia+1

LPG Trade Routes Redrawn

The blockade has cut off LPG exports from Saudi Arabia, Qatar, the UAE, and Iran, forcing buyers worldwide to find alternative sources. Before the crisis, roughly 54 oil, chemical, and LPG tankers passed through Hormuz daily; by late May, that figure had fallen to an average of 11 vessels per day. India, which imports about 90% of its LPG from the Middle East, experienced its worst cooking gas crisis in decades in March, with sales by state retailers falling more than 17% year-on-year.baystreet+1

The United States has emerged as the primary beneficiary. American LPG exports, already the world's largest following the shale revolution, have surged as Asian and European buyers redirect purchases away from the Persian Gulf. Propane prices from the Texas Gulf Coast climbed roughly 25% from pre-war levels by mid-June. India is now shifting toward American propane, and private commodity traders with flexible fleets have become critical to maintaining supply chains.baystreet

Fertiliser Prices Under Pressure

The disruption extends well beyond energy markets. Ballance Agri-Nutrients, New Zealand's farmer-owned fertiliser co-operative, warned in its August Fertiliser Outlook that sulphur, urea, and DAP prices remain "highly sensitive to developments in the Middle East," with Hormuz disruptions identified as a key price risk heading into the southern hemisphere spring season.farmersweekly

Sulphur prices sit at historically high levels amid constrained supply and shipping uncertainty, while urea markets, though somewhat stabilised, saw renewed price lifts as the conflict persisted. A March analysis from the University of Illinois found urea prices had already risen more than 28% in the early weeks of the crisis, and Bank of America estimated some fertiliser prices climbed 30% to 40%, according to Forbes.farmdocdaily.illinois+2

Emerging Diplomatic Signals

A potential easing may be on the horizon. Iran and Oman announced this week that they have reached an agreement on proposed new shipping route coordinates through the strait, a development being closely watched by energy markets and governments. Whether this arrangement translates into a meaningful reopening of commercial traffic remains uncertain.aljazeera+1

"Disruption really is the new normal," Ballance head of procurement Shane Crean said. "A high proportion of fertiliser supply is linked to the Persian Gulf region, making many fertiliser products used by New Zealand farmers and growers particularly sensitive to developments in the area".farmersweekly