Global fertilizer prices are experiencing a dramatic surge, with the World Bank warning that prices could rise more than 30% in 2026 due to the Middle East conflict. As reported by the World Bank, urea prices have already jumped 53.7% month-on-month in March to $725.6 per ton, marking their highest level in four years. The conflict has disrupted the Strait of Hormuz, which handles nearly one-third of global seaborne fertilizer trade - approximately 16 million tons annually. The World Bank expects urea prices to close this year at $675 per ton, nearly 60% above 2025 levels, though prices may decline by 25% in 2027 if natural gas prices ease.
Monthly domestic urea production has rebounded to last year's levels, with output reaching 21 lakh tonnes in April, according to the fertiliser ministry. As reported by The Times of India, this represents a significant recovery from March's production of around 16 lakh tonnes, which had been disrupted by the West Asia conflict affecting LNG supplies. The April production level matches the output recorded in April of the previous year, when domestic urea production was close to 22 lakh tonnes.
The production recovery follows the restoration of natural gas supplies, with up to 97% of natural gas supply now restored, according to the fertiliser ministry. As reported by The Times of India, this has enabled the recovery in urea production after the March disruption caused by the West Asia conflict. The ministry noted that increased domestic production, robust opening stock, and assured imports of soil nutrients will be sufficient to meet kharif crop requirements.
The overall fertiliser stock position remains robust at 193.8 lakh tonnes as of Thursday, representing 50% of the estimated demand of 320 lakh tonnes for the entire kharif season, as reported by The Times of India. Since the beginning of the conflict, 78 lakh tonnes of fertilisers including urea, Diammonium Phosphate (DAP), Nitrogen (N), Phosphorus (P) and Potassium (K) or NPKs, and Single Super Phosphate (SSP) have been added to stock through domestic production and imports. According to Aparna Sharma, additional secretary in fertiliser ministry, as reported by The Times of India, fertiliser availability remains robust with supplies continuing to exceed requirements.
The World Bank has identified several key risks that could further escalate fertilizer prices beyond current projections. Among the main upside risks are a prolonged period of severe shipping constraints in the Middle East or a resurgence of hostilities, which could worsen shortages. The World Bank warns that concerns about fertilizer availability in domestic markets could prompt major exporters to impose restrictions, while a stronger-than-expected rebound in natural gas prices would further increase production costs. If these risks materialize, the average urea price in 2026 could exceed the average of $700 per ton recorded in 2022, marking its second-highest real level since 1974.
