Why a War in the Gulf Just Made Indian Fertiliser So Expensive

It's not obvious, on the face of it, why a conflict in the Persian Gulf should matter to a farmer in Punjab preparing to plant. The connection runs through a single, enormously consequential piece of geography: the Strait of Hormuz, the narrow sea passage between Iran and Oman that in 2024 carried roughly 30% of the world's seaborne fertiliser trade and about 20% of its liquefied natural gas (LNG) — the primary feedstock for urea, the fertiliser Indian farmers use more of than any other. When fighting escalated in the region in early 2026 and shipping through the Strait effectively ground to a halt, that single chokepoint became a direct line from a war zone to an Indian farmer's input costs.

The paper's clearest contribution is laying out exactly how exposed each major fertiliser is, and none of them are exposed the same way. Urea, India's largest-volume fertiliser by far, looks self-sufficient on paper — only 18% of demand is met through direct imports. But that apparent independence is misleading: domestic urea production runs on natural gas, and roughly 30-35% of the 18-19 billion cubic metres India needs each year arrives as imported LNG, much of it historically from the Gulf region. DAP (diammonium phosphate) is more directly exposed, with 57% of demand imported outright, and the domestic portion itself depends on imported phosphoric acid and phosphate rock at an 85-90% rate. MOP (muriate of potash) is the starkest case of all: India produces essentially none of it, so 100% of the country's potash supply comes from a handful of exporting countries, with zero domestic buffer of any kind.

The numbers move from abstract exposure to concrete cost quickly. India's Fertiliser Price Index — a weighted tracker of nitrogen, phosphate, and potash costs — climbed to roughly 182-190 in early 2026, up from about 128-166 the year before. Urea specifically rose more than 75% year-on-year, trading near USD 700 per ton in some markets, while DAP, ammonia, and ammonia-based products rose around 20%. For context, fertiliser typically accounts for up to a quarter of the total cost of producing an agricultural commodity — so a jump of this size isn't a rounding error on a farmer's ledger, it's a meaningful share of total production cost moving sharply upward in a matter of months.

Here's the part of the story that cuts against the alarm: Indian food inflation has, so far, stayed largely muted. The reason is almost entirely inventory. India entered the Kharif 2026 season with total fertiliser stocks up roughly 36.67% year-on-year — DAP inventories alone were up 117.92%, NPK up 74.36%. Farmers this season are, in effect, buying fertiliser that was largely already in the country before prices spiked. The one exception is potash: MOP inventories actually fell 10.48%, a warning sign given that segment's complete import dependency and total lack of domestic production to fall back on.

The paper is explicit that this cushion is temporary, not a sign the disruption isn't serious. The real test arrives after the current stockpiles are used up and Indian buyers have to re-enter the global market at whatever price is prevailing then — which the paper estimates will show up roughly six to eight months after the next harvest cycle, not immediately.

The paper's second thread is less about fertiliser India imports and more about produce India exports. India ships roughly USD 12 billion worth of agricultural goods to West Asia annually — rice, buffalo meat, spices, fresh fruit and vegetables — and the Gulf Cooperation Council countries together take about 12% of their total food imports from India. That trade has been hit from a different angle: freight costs up 20-40% since the conflict began, marine insurance premiums up as much as 50%, and carriers adding Emergency Risk, Emergency Fuel, and War Risk surcharges on top of both. For perishable exports like fresh produce and dairy, ships taking longer alternate routes to avoid the conflict zone adds real spoilage risk on top of the higher sticker price.

Zooming out, the paper places India's situation inside a wider, harder-hit global picture. The FAO Food Price Index rose to 128.5 in March 2026, its second consecutive monthly increase, with cereals, vegetable oils, dairy, meat, and sugar all climbing. The World Food Program has estimated that up to 45 million additional people could be pushed into acute food insecurity if the conflict continues past June 2026 — concentrated, the paper notes, in countries that were already near the bottom of the Global Hunger Index and lack India's buffer-stock cushion. India itself isn't immune to that underlying vulnerability: the country ranked 102nd of 123 countries on the 2025 Global Hunger Index, with more than a third of children under five stunted — context that makes the paper's warning about fertiliser access feel less like an abstract market risk and more like a genuine food-security question.