Oil isn’t the only threat, Fertilizer and sulfur could trigger the next commodity shock – Firstpost

The global economy is facing a multi-layered supply shock extending far beyond crude oil, as disruptions linked to the Strait of Hormuz now hit fertilizer, sulfur, industrial metals, and food supply chains simultaneously.

While markets initially reacted to the oil supply disruption, analysts and commodity experts are warning that the deeper crisis lies in the collapse of interconnected industrial and agricultural inputs that power the global economy.

According to data cited by The Wall Street Journal from Argus pricing and the US Geological Survey, sulfuric acid prices in China surged nearly 1,150 per cent in May compared with levels seen two years ago. Sulfur prices in the Middle East jumped around 750 per cent, while Chile, the world’s largest sulfuric acid importer, witnessed a 230 per cent spike.

Sulfuric acid is one of the world’s most essential industrial chemicals, used in fertilizer production, copper processing, battery manufacturing, and semiconductor fabrication. Roughly half of global sulfur exports originate from the Persian Gulf region, placing the chemical supply chain directly in the path of the ongoing Hormuz disruption.

The crisis intensified after Saudi Aramco CEO Amin Nasser described the situation as “the largest energy supply shock the world has ever experienced.”

According to CNBC, nearly one billion barrels of global oil supply have been disrupted since the conflict escalated, with net losses still standing at around 880 million barrels despite pipeline rerouting and emergency reserve releases. Shipping traffic through the Strait of Hormuz has collapsed from around seventy vessels per day before the conflict to just two to five vessels daily now, while nearly 240 ships remain stranded outside the chokepoint.

Industry estimates suggest global markets are losing nearly 100 million barrels of oil every week the strait remains partially blocked. Analysts warn that if disruptions continue beyond mid-June, energy market normalization may not occur before 2027.

The supply strain is now spreading into strategic reserves. The Wall Street Journal reported that US crude inventories, including the Strategic Petroleum Reserve, have fallen for four consecutive weeks and risk reaching their lowest levels since 1982. Meanwhile, Bloomberg reported that the International Energy Agency coordinated the release of 400 million barrels of emergency reserves, though the United States has so far released less than half of its pledged volume.

JPMorgan’s global commodities head Natasha Kaneva warned that OECD oil inventories could enter “operational stress levels” by June and potentially hit minimum operating thresholds by September.

However, economists increasingly argue that the fertilizer crisis could prove even more destabilizing than oil itself. According to the United Nations Food and Agriculture Organization, nearly one-third of global fertilizer trade passes through the Strait of Hormuz. Qatar Fertiliser Company, which alone supplies around 14 per cent of global urea, has reportedly declared force majeure, while several fertilizer facilities across the Gulf have suspended or reduced production.

An estimated three to four million tonnes of fertilizer supply per month are currently stalled. Commodity data cited by CNBC shows urea prices FOB Egypt have surged from roughly $400 per tonne before the conflict to nearly $700 per tonne now.

Reuters reported Brazil’s urea imports have fallen 33 per cent year-on-year, while Bangladesh has shut four of its five fertilizer plants. India has also reportedly reduced output at three urea facilities, while the United States faces a fertilizer supply shortfall of nearly 25 per cent during the critical spring planting season.

The United Nations World Food Programme has warned that as many as 45 million people could fall into acute hunger within months if supply disruptions continue. Analysts note that the 2022 Ukraine conflict pushed roughly 70 million people into food insecurity over 18 months, but the current shock is unfolding at a much faster pace.

The industrial fallout is also accelerating. Aluminum, helium, sulfur, and nickel supply chains are all under pressure. Helium remains critical for semiconductor manufacturing, while sulfur shortages are now affecting Indonesia’s nickel industry, forcing some producers supplying EV battery markets to reduce output.

Geopolitical tensions continue to escalate alongside the commodity crisis. Donald Trump on Monday rejected Iran’s latest proposal as “totally unacceptable” and claimed the ceasefire remains “on massive life support.” Meanwhile, a US Navy Ohio-class nuclear submarine reportedly arrived in Gibraltar ahead of Trump’s scheduled visit to Beijing on May 14-15.

Analysts say the coming diplomatic engagements between Washington and Beijing could now shape the trajectory of not only energy markets, but also global food security and industrial supply chains.

With sulfuric acid prices in China up 1,150 per cent, emergency oil inventories nearing historic lows, fertilizer shortages worsening globally, and hunger projections climbing sharply, economists warn that financial markets may still be underestimating the scale of the unfolding crisis.

The market priced the oil shock. But the fertilizer and sulfur crisis may prove far harder to contain.