https://sonar21.com/sulfur-and-urea-their-role-in-the-global-economy-and-who-is-hurt-most-by-the-persian-gulf-cutoff/

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https://etouffoir-blogspot-com.translate.goog/2026/10/le-soufre-et-luree-leur-role-dans.html?_x_tr_sl=hl&_x_tr_tl=fr&_x_tr_hl=fr

6 October 2026 by Larry C. Johnson

The global economic damage caused by the closure of the Strait of Hormuz is generally not understood by most policymakers. Public and policy discussion of the Strait of Hormuz closure has fixated on crude oil: tanker counts, Brent prices, strategic petroleum reserves. That focus is understandable, but it misses much of the damage. The Persian Gulf is also a dominant global supplier of liquefied natural gas, urea, sulfur and helium. Each feeds a different part of the world economy (power and industrial gas, food production, phosphate fertilizer and metals refining, and semiconductors and medical imaging), and none can be replaced by drawing down an emergency stockpile the way oil can. The loss of these flows has received a fraction of the attention given to oil, even though for several import-dependent countries it is the more consequential shock.

This paper addresses two of these neglected commodities, sulfur and urea. It explains why they matter to the global economy, sets out how much the Gulf states produce, and identifies the countries most adversely affected by the cutoff. LNG enters the analysis only where it bears on fertilizer production; helium is outside the scope of this paper.

Urea and sulfur are low-value bulk commodities that sit underneath two of the world’s most important production systems: food and metals. Urea is the world’s main nitrogen fertilizer. Sulfur, converted to sulfuric acid, is the indispensable input for phosphate fertilizer and for leaching copper, nickel and cobalt. The Persian Gulf is the single largest export source of both, and the effective closure of the Strait of Hormuz since 28 February 2026 has removed most of that supply from world markets.

The damage is not evenly distributed. The countries hit hardest share three characteristics: heavy import dependence on Gulf product, little or no domestic substitute, and thin stockpiles. On that basis the most adversely affected are India, Bangladesh, Pakistan, Sri Lanka and Nepal in South Asia; Brazil and Australia among major agricultural exporters; Indonesia, the Democratic Republic of the Congo, Zambia and Chile on the sulfur-to-metals side; Morocco and China as phosphate producers; and a group of low-income East and Southern African importers that WTO analysis flags as the most exposed of all.

Urea prices have largely retraced their April spike thanks to Chinese export quotas and weaker demand. Sulfur has not, because it is a byproduct with no quick replacement, and because Russia and China have simultaneously restricted their own exports. The sulfur shock is therefore the more durable and less appreciated of the two.

Why urea matters

Urea (46% nitrogen) is the most widely traded nitrogen fertilizer and the cheapest way to deliver nitrogen to cereal crops such as rice, wheat and maize. It is made by converting natural gas into ammonia and then reacting the ammonia with carbon dioxide. Gas is roughly three-quarters or more of the cash cost of production, which is why the industry has clustered where gas is cheapest: the Gulf, Russia, North Africa and, for domestic use, China.

Nitrogen cannot be skipped for a season without yield loss, so demand is inelastic in the short run. When urea becomes unaffordable, farmers in poorer countries apply less and yields fall the following harvest; the food-price effect therefore arrives with a lag. Beyond agriculture, urea is used in diesel exhaust fluid for trucks, in urea-formaldehyde resins for wood panels, and in animal feed.

The Gulf’s weight in the urea trade

Estimates of the Gulf’s share vary with definitions (production vs. exports, Middle East vs. Hormuz-dependent only, seaborne vs. all trade), but all point to the region being the single largest source:

Argus puts Middle East urea exports at about 20 Mt/yr, roughly 35% of seaborne trade, with just over 17 Mt/yr either loading inside Hormuz or coming from Iran.
RaboResearch estimates about 30% of global urea normally transits the Strait; NDSU puts the Gulf at about 43% of seaborne urea exports; a farmdoc daily scenario paper uses about 40% of globally traded urea.
IFA estimates that roughly 12 Mt/yr of urea moves through Hormuz.

Why sulfur matters

Sulfur matters almost entirely because of sulfuric acid, the most heavily produced industrial chemical in the world. The largest single use is the acidulation of phosphate rock to make phosphoric acid and from it DAP, MAP and TSP fertilizers. The second strategic use is hydrometallurgy: heap and agitation leaching of copper ores (SX-EW), and high-pressure acid leaching (HPAL) of nickel and cobalt laterites, which is the backbone of Indonesia’s battery-metals industry. Sulfuric acid is also used in petroleum refining, titanium dioxide pigment, viscose, paper and water treatment.

Two features make sulfur shocks unusually severe. First, almost all elemental sulfur is a byproduct of removing hydrogen sulfide from sour gas and crude, so no producer can raise output in response to price. Second, consumers who process metals often cannot run at partial rates: Kpler notes that HPAL plants are effectively either on or off.

Scale of metals exposure

SX-EW is roughly 15% of global copper cathode output, concentrated in the DRC, Chile and the United States; acid use runs from about 3 t to more than 20 t per tonne of copper depending on ore grade (Kpler).
HPAL nickel needs roughly 10 t of sulfur per tonne of nickel, so every $100/t rise in sulfur adds about $1,000/t to nickel cost (Red Door Research via S&P Global).
One industry estimate holds that without sulfuric acid about 30% of nickel processing, 50% of copper processing and 70% of cobalt processing would stop (SunSirs). Treat this as indicative.

The Gulf’s weight in the sulfur trade

The Middle East produces about a quarter of the world’s sulfur but supplies about 45% of seaborne trade (SMM); IFA puts the share at 49% of global sulfur trade, or about 15 Mt/yr through Hormuz; S&P Global cites about 20 Mt/yr, half of traded supply. Because Gulf states consume little of what they recover, nearly all of it is exported.

Gulf production snapshot

Sulfur (USGS MCS 2026, all forms, thousand metric tons)

Country	2024	2025 (est.)	Share of world 2025
Saudi Arabia	7,200	7,200	8.6%
United Arab Emirates	6,300	6,300	7.5%
Qatar	3,000	3,100	3.7%
Iran	2,000	2,100	2.5%
Kuwait	1,300	1,300	1.5%
Iraq, Bahrain, Oman	not reported separately	—	small
World total	83,900	84,000	100%

Shares calculated from USGS figures. Iraq, Bahrain and Oman are not broken out by USGS; their output is believed to be small (Oman a few hundred kt; Bahrain and Iraq less), but these are estimates, not sourced figures.

Urea (capacity or output, million metric tons per year)

Country	Main producers	Mt/yr	Basis
Iran	Pardis, Shiraz, Kermanshah, Khorasan, Razi and others	~9 (≈5 exported)	Argus
Qatar	QAFCO, Mesaieed	~6	QatarEnergy
Saudi Arabia	SABIC Agri-Nutrients, Jubail	4.8 (SABIC)	CRU
Oman	Omifco (Sur); SIUCI (Sohar)	2.07 Omifco output 2025, plus SIUCI	Argus
UAE	Fertiglobe Fertil, Ruwais	~2	Argus (comparable to Omifco)
Bahrain	GPIC	~0.7	Estimate
Kuwait	PIC urea idled (c. 2017)	~0	Estimate
Iraq	State plants, intermittent	marginal	Estimate

Some commercial databases report Bahrain urea output of over 6 Mt and Iran over 11 Mt; both exceed known plant capacity and should not be relied on. Oman’s two plants lie outside the Strait and have continued to ship.

The 2026 cutoff and the compounding shocks

The US-Iran war that began on 28 February 2026 brought commercial dry-bulk traffic through Hormuz to a halt. Several further shocks then compounded it:

Physical damage. QatarEnergy halted production in March after attacks on its Ras Laffan and Mesaieed sites; Mesaieed is home to QAFCO. SMM expects damaged gas and refining assets in Qatar and the UAE to keep exports below pre-war levels in the medium term, which directly limits recovered sulfur.
Gas cutoff to importers’ own plants. Loss of Qatari LNG forced urea plants in South Asia to shut, converting an import problem into a domestic production problem. Reuters reported that Bangladesh shut four of its five urea plants.
China’s sulfuric acid export ban. On 10 April China replaced its acid export quota with a full ban through August; Chile, Indonesia and Saudi Arabia were its main buyers (Kpler).
Russia’s sulfur export ban. Extended on 25 June to 31 December 2026, removing the other major swing supplier (SMM).

Measured impact

The International Trade Centre found urea exports from Hormuz-dependent economies fell 83% by volume in April 2026 versus April 2025, and that alternative suppliers had not replaced the lost urea or sulfur.
RaboResearch estimated the closure was removing about 2 Mt of fertilizer a week from world markets, with farm fertilizer costs up 30–40% since the war began.
The WTO’s Hormuz tracker showed fertilizer shipments through the Strait still near zero in September, even as urea prices fell back toward pre-war levels (around $386/t) on Chinese quota releases.
Sulfur has stayed high: ADNOC raised its July official selling price to $1,000/t FOB, and delivered prices in Indonesia exceeded $1,000/t (SMM; CRU). China’s sulfur imports in May were down 66% year on year.

Countries most adversely affected

The ranking below weighs three factors: share of supply drawn from the Gulf, ability to substitute (domestic production, alternative suppliers, stockpiles), and economic or food-security consequence. Countries are grouped by the channel through which the shock reaches them.

Country	Channel	Exposure	Severity
India	Urea, ammonia, sulfur, LNG	About two-thirds of nitrogenous fertilizer imports from the Gulf (WTO); 81% of ammonia supply tied to the Gulf (farmdoc); ~54% of all fertilizer imports in 2024 (NDSU). LNG loss also curbs domestic urea output.	Very high
Bangladesh	LNG, urea	Four of five urea plants shut for lack of gas; limited stockpiles (Reuters).	Very high
Pakistan	LNG, urea	Gas-fed fertilizer plants curtailed; named by Reuters and Rabobank as hit hard, with thin stocks.	High
Sri Lanka, Nepal	Urea	Listed by the WTO among the most exposed importers; small, fully import-dependent markets with fiscal constraints.	High
Brazil	Urea, phosphate	Almost entirely import-dependent for urea, ~40% of it from the Gulf; also loses Moroccan phosphate as a substitute because Morocco lacks sulfur (NDSU; Reuters).	Very high
Australia	Urea	68–72% of urea from the Gulf, the highest share among major producers; local shortages reported (NDSU; farmdoc; Reuters).	High
Thailand	Urea	Nearly half of nitrogenous fertilizer imports from the Gulf (WTO).	Moderate–high
Indonesia	Sulfur (nickel, phosphate)	Imported 5–5.3 Mt of sulfur in 2025, ~75% from the Middle East; HPAL nickel producers moved from bottom to top of the cost curve; Q1 sulfur imports down 30%; cutbacks under study (S&P Global; CRU).	Very high
DRC and Zambia	Sulfur (copper, cobalt)	The African Copperbelt takes about 90% of its sulfur from the Gulf (CRU); DRC imported 1.3–1.4 Mt in 2025. Zambia imposed acid export permits on 27 March.	High
Chile	Sulfuric acid (copper)	Consumes ~9 Mt/yr of acid, 4 Mt imported; lost ~1.5 Mt/yr from China to the export ban (Trafigura via S&P Global). One trade source reports a 6% fall in H1 copper output (unconfirmed).	High
Morocco	Sulfur (phosphate)	OCP, the world’s largest phosphate exporter, depends on imported sulfur; IFA and NDSU flag it among the most affected supply chains.	High
China	Sulfur (phosphate)	Large sulfur importer for phosphate; responded by banning acid exports, which shifted the pain onto Chile and Indonesia.	Moderate
East and Southern Africa	Urea, phosphate	Kenya, Malawi, Mozambique, Rwanda, South Africa, Tanzania, Uganda, Zimbabwe (WTO) and Somalia (Reuters): low stocks, weak currencies, seven least-developed countries among the most exposed.	High (food security)
United States	Urea, phosphate	About two-thirds of urea and DAP/MAP supply is domestic; the rest is partly Gulf-origin. Price exposure is real but supply is buffered (farmdoc).	Moderate

Notes on the leading cases

India is the largest single loser in absolute terms. It is hit three ways at once: imported urea and ammonia, imported sulfur for its phosphate plants, and imported LNG for its own urea plants. The government has revised its roughly $4.5 billion nutrient-based subsidy programme and is prioritising gas for fertilizer, which shifts the cost onto the budget rather than eliminating it.

Brazil is the most exposed major agricultural exporter. Because it imports nearly all its nitrogen and most of its phosphate, and because the sulfur cutoff simultaneously constrains Morocco’s ability to supply phosphate, Brazil loses both its direct and its substitute sources. The consequence matters for world soybean and maize supply, and therefore for China’s feed imports.

Indonesia is the clearest case of the sulfur channel reaching the industrial economy. With more than half of world nickel output and HPAL capacity that depends on Gulf sulfur, the shock passes through to stainless steel and battery cathode supply chains. CRU reported nickel prices rising alongside a record copper price of about $13,000/t.

The African Copperbelt illustrates the value of self-supply. Operators with captive acid, such as First Quantum in Zambia and the Kamoa-Kakula acid plant in the DRC, reported limited disruption, while leach operations dependent on imported Gulf sulfur face output cuts.

Offsets and relative winners

Producers outside the Strait: Oman’s Omifco and SIUCI, and Saudi Arabia via Red Sea ports; SABIC has trucked urea overland from Jubail to Yanbu, though at small scale (Fertilizer Daily).
China has released urea export quotas, which did most of the work in bringing urea prices back down. Russia benefits on urea but has chosen to keep sulfur at home.
Producers with domestic gas and captive acid, notably the United States, Canada and integrated smelter-acid copper operations, are relatively insulated.

Outlook and indicators to watch

Urea will normalise first once ships move, because Gulf plants outside the damaged sites can restart quickly and other exporters have spare capacity. Sulfur will lag, because recovery depends on gas and refinery throughput in Qatar and the UAE, some of which is damaged, and because Russian and Chinese export restrictions run at least to year-end. Key indicators: weekly Hormuz bulk transits; QatarEnergy and ADNOC sulfur OSPs; Indonesian HPAL operating rates; Indian urea tender volumes and prices; Chinese export quota decisions; and whether Russia renews its sulfur ban beyond 31 December 2026.

Spoke with Jelena and Moby this morning about the bridges in Kiev and reports about plague in Russia:

https://www.youtube.com/watch?v=oM3jcD7XWNg