Strait of Hormuz Closure Halts Fertilizer, Oil and LNG

Iran has closed the Strait of Hormuz, stopping shipments of fertilizer, crude oil and liquefied natural gas through the narrow waterway that connects the Persian Gulf to global markets. The closure followed escalating tensions involving Iran, the United States and Israel.

The United Nations warned the closure could worsen global hunger by blocking urea fertilizer shipments and disrupting fuel deliveries. The Food and Agriculture Organization and the World Food Programme flagged risks to crop yields and livestock feed in countries that rely on imports.

Officials reported a sharp rise in urea prices since the closure began. Higher fertilizer costs and delayed deliveries can reduce planting and yields, increasing the number of people facing acute hunger in low-income, import-dependent nations.

Traders and shipping firms rerouted some cargoes away from the strait. Alternative routes add voyage time and transportation costs. Oil and LNG flows that normally transit the channel have been affected, and markets are monitoring the impact on energy and commodity prices.

Prediction markets placed the odds of Strait of Hormuz traffic returning to normal by May 15 at 0.2% and by May 31 at 6.5%. A separate contract showed a 23.5% chance that former President Donald Trump would announce a U.S. blockade lift by May 31. A contract pricing a meeting between President Xi Jinping and Iranian officials by May 15 stood at 0.1%.

Market participants noted the pricing reflects expectations that traffic is unlikely to resume quickly and that the closure could have a high impact on trade and commodity flows. The disruption compounds earlier supply strains linked to the conflict in Ukraine.

Observers are watching U.S.-Iran diplomatic and military developments, directives from U.S. Central Command affecting naval operations in the Gulf, and operational updates from the International Maritime Organization. Movements in oil prices and announcements from major shipping lines about rerouting or suspending services will be tracked for further indications of how long the disruption may last.