Most shoppers think of fertilizer as a bag of pellets. It is closer to a bag of gas.
Synthetic nitrogen fertilizer is made through the Haber-Bosch process. That process uses natural gas as the fuel. It also uses gas as the chemical input. Each tonne of ammonia takes 30 to 35 MMBtu of gas. That gas alone makes up 70% to 90% of the total cost.
So when gas moves, fertilizer follows. So do farmers, food makers, and grocery chains.
The Strait of Hormuz is not just an oil story. CF Industries reports the Middle East accounts for about 30% of globally traded ammonia. It accounts for about 35% of globally traded urea. Urea is the most widely used nitrogen fertilizer in the world.
About a third of all seaborne fertilizer trade flows through that one strait. That is roughly 16 million tonnes a year. UNCTAD says oil tanker freight rates have jumped more than 90% since late February 2026.
On some Middle East fertilizer routes, shipping costs have risen as much as 677%. That is from $26 a tonne to $202 a tonne. War risk insurance is another squeeze. UNCTAD says some insurers have pulled coverage for vessels in the Persian Gulf entirely.
CF Industries says it takes three to four years to build a new nitrogen plant. The company's own $3.7 billion ammonia project in Louisiana is not set to start up until 2029. That is the largest project of its kind in the world.
That timeline is the punchline. Even if every producer broke ground tomorrow, the next planting season would still run on the existing fleet of plants.
The build-time gap is also why fertilizer stocks tend to spike on news. CF Industries shares hit a record high on the Hormuz disruption. Traders are pricing in tighter supply for years, not months.
There is one bright spot for North American producers. U.S. natural gas trades at a steep discount to gas in Asia and Europe. That gives American plants a cost edge during a global gas shock.
The math is simple. When 70% to 90% of your cost is gas, cheaper gas is a moat. CF Industries and other U.S. producers have leaned into that edge with new partners.
The fertilizer that costs more today will plant a crop you eat next year. That is why a tanker stuck off the coast of Iran can show up months later in the price of a loaf of bread.
It is also why the food story is really an energy story in slow motion.
Watch the spread between U.S. natural gas prices and global urea prices over the next two quarters. If urea stays high while U.S. gas stays cheap, that gap shows up in U.S. producer margins. It will also show up in the next round of earnings reports.
A wider spread is the cleanest signal that Hormuz is reshaping global fertilizer flows in favor of producers outside the region.