At the start of 2026, the global urea prices jumped as Middle Eastern supply tightened, led by severe winter disruptions to natural‑gas deliveries in Iran, the world’s third‑largest urea exporter and one of several key suppliers moving product through the Strait of Hormuz. Political instability and a deteriorating security environment inside Iran, heightened U.S.-Iran geopolitical tensions complicated logistics and adding uncertainty to outbound flows, further supporting the upward trend in export quotations.
In February 2026, Iran posted a nominal FOB-port price of $430 per tonne for bulk urea for March shipment — around 11% above the December range of $380–390 per tonne. Meanwhile, Iran-based company Pardis sold 30,000 tonnes of granular urea at around $442 per tonne on FOB basis, about $12 per tonne (roughly 2.8%) higher over the nominal quote.
The Profercy World Nitrogen Index climbed to 217.4 points as of 5 February 2026, up 10% since the start of the year, 15% above the same period in 2025, and 31% higher than in early 2024, underscoring the continued firming of global nitrogen prices. RIC: PFYWWNITIDXUKW (Profercy World Nitrogen Index).
At the beginning of January, a severe cold spell forced Iran to divert natural‑gas supply from industries toward households, typically consuming 70–75% of daily gas demand during peak winter periods. As a result, several major nitrogen producers in Iran — Kermanshah Petrochemical Company, Khorasan Petrochemical Company, MIS Petrochemical Company (Mahshahr Industrial Complex), Shiraz Petrochemical Company, and Lordegan Urea Fertilizer Company — were either temporarily shut down or operating at reduced rates, immediately tightening prompt urea availability. Several February spot urea tenders, including those ones issued by Pardis and Shiraz companies, were cancelled or ended without sales, pushing buyers toward alternative Middle Eastern and North African suppliers.
Beyond Iran, regional urea indicators also moved higher. FOB Egypt urea prices rose to around $504 per tonne in February, up $20–30 on-month, as Egypt remained one of the few consistently accessible origins for buyers, particularly for EU countries and Turkey, as well as major Asian importers including India, alongside markets in Latin America, given reduced Iranian export availability.
“Egypt remains one of the few consistently accessible supply options amid Iranian curbs,” an Egypt‑based trader said.
Iran’s role in global urea supply
Iran is one of the key urea producers and exporters in the Middle East, benefiting from a well‑developed petrochemical base and access to low‑cost natural gas. The country’s urea production capacity stands at roughly 6.5–7.0 million tonnes per year, while exports reach up to 4.5–5.0 million tonnes, giving Iran an estimated 8–10% share on global urea trade, according to various industry analysts’ estimates. Importantly, Iran ranks among the world’s top three urea exporters which shipments transit the Strait of Hormuz, a narrow but essential corridor for international fertilizer flows. This underscores the country’s strategic importance within global urea supply chains and its relevance for markets across Asia, Africa and the Middle East.
Supported by low‑cost gas feedstock and large production capacities, Iran plays a central role in the granular urea segment. Urea is the world’s most widely used nitrogen fertilizer, and granular urea with 46% nitrogen content offers efficient and uniform application, making this segment highly sensitive to supply changes. When Iranian urea exports decline, whether due to winter‑related gas shortages in the country or lower domestic production, global urea prices tend to react immediately as the market temporarily loses a key supplier.
The potential shutdown of Iranian exports has emerged as one of the most significant supply‑side risks for the urea market. As roughly up to 1.0 million tonnes of Iran-origin product were effectively absent from global availability at the start of 2026, demand for spot cargoes has intensified as buyers turn to alternative origins. Tensions around the Strait of Hormuz, a corridor that handles over 40% of seaborne urea shipments, have further increased insurance premiums and slowed ship movements. Although Egypt and the Persian Gulf producers, including Saudi Arabia, Qatar and Oman, continued to ship steadily, their combined output still falls short of covering a multi‑million‑tonne gap, tightening supply and heightening competition across key Asian markets.
“Even steady volumes from Egypt and Gulf suppliers cannot fully offset the shortfall, prompting Asian buyers to compete for limited cargoes more aggressively and keep volatility elevated,” an India‑based trader said.
Red Sea disruptions escalated in early February after renewed Houthi’s missile and drone attacks near the Bab‑el‑Mandeb Strait, prompting major carriers to divert ships around the Cape of Good Hope — a detour that extended voyages by up to two weeks and, in some cases, stretched transit times to 30–40 days, at least a two‑week delay compared with running through the Red Sea. These security incidents also pushed war‑risk insurance premiums and freight surcharges higher, while intensified naval patrols further slowed traffic through the region.
“Buyers ultimately paid more as reduced Iranian supply coincided with rising logistics costs,” a Turkey‑based fertilizer exporter said.
Geopolitics add a premium
Rising tensions between the United States and Iran added a clear risk premium to Middle East nitrogen markets. Buyers now anticipate possible disruptions in production or shipping. At the same time, Red Sea risks, vessel rerouting, higher insurance costs and longer voyages continue to push logistics costs up, widening the gap between nominal offers and delivered values for prompt cargoes.
“The situation intensified after the U.S. signalled it might introduce 25% tariffs on imports from countries maintaining trade links with Iran. With Washington also warning of tougher strikes if nuclear talks fail, some buyers are demanding a higher risk premium or shifting to alternative suppliers,” a Turkey‑based fertilizer trader said.
Author: Iryna Prodan, Research Analyst, Agriculture Edited by Svitlana Malys © LSEG 2026. All rights reserved
Iryna Prodan is an experienced agricultural market analyst with over 15 years of expertise in the EU and Ukrainian markets. She specializes in fertilizer price assessments—particularly ammonium nitrate and urea—as well as grains, oilseeds, and vegetable oils across the EU and South America. At the London Stock Exchange Group, she delivers daily insights and independent research that support strategic decisions in agribusiness, focusing on supply-demand dynamics and pricing trends.