Ongoing Middle East hostilities are spurring urea supply disruptions and intensifying uncertainty around natural gas availability and logistics, with potential knock-on effects for global nitrogen output.
On March 2, Qatar Energy halted the production of liquefied natural gas (LNG) and “associated products” after Iranian strikes on facilities at Mesaieed and Ras Laffan – this led to a shutdown of urea production at QAFCO’s 5.6 Mt/y Mesaieed urea plant on 4 March, marking the first confirmed fertilizer production impact in the region.
Middle East nitrogen producers typically source gas domestically – SABIC AN (4.7 Mt/y) via Saudi Aramco, Fertiglobe Ruwais (2.1 Mt/y) via ADNOC, GPIC Bahrain (0.6 Mt/y) via Bapco, and Oman (3.2 Mt/y) via OQ Gas Networks SAOC. Most other sites are currently understood to be operating normally. However, others could mirror Qatar’s approach if the conflict persists.
Duration is the key variable: CRU expects the two-week point to be pivotal for operational continuity. If disruption extends beyond two weeks, the main risk shifts to broader supply interruptions driven by constrained export routes, limited domestic offtake, and inadequate storage. With an additional two weeks potentially needed to restart idled capacity, this would imply a meaningful reduction in Middle East supply availability for March, alongside higher costs from repeated shutdown/restart cycling.
Qatar LNG outage: Direct exposure and knock-on effects
The shutdown of Qatar Energy's LNG facilities will create a ripple effect across global gas markets, directly threatening nitrogen production in dependent countries. Key Asian economies are particularly exposed, with China (25%), India (13%), and Pakistan (9%) being major recipients of Qatari gas.
The impact on fertilizer output will be most severe in South Asia. Pakistan is wholly dependent on Qatar for its LNG, while Bangladesh sources 65% of its supply from the nation. India, a major nitrogen producer, relies on Qatar for 44% of its LNG imports. Consequently, fertilizer production in these three countries faces a direct and significant threat from the supply disruption.
Imported LNG dependency heightens risk for India’s fertilizer sector
Natural gas is the critical feedstock for India's domestic fertilizer industry, which is responsible for meeting approximately 80% of the country's urea requirements. The sector is a cornerstone of national gas demand, consuming over 30% of the total supply. All 32 of India's ammonia-urea plants are gas-based, procuring feedstock from either domestic companies like ONGC or as imported Re-gasified LNG (R-LNG) through GAIL (India), making the industry highly sensitive to disruptions in gas availability.
A shutdown of gas supplies from Qatar will directly and significantly impact fertilizer production in India, as the country relies on Qatar for approximately 44% of its total imported LNG. The domestic industry is already beginning to feel the effects, with reports of IFFCO halting operations. Other domestic producers have also already adjusted operations, with Chambal Fertilisers and Chemicals taking a unit offline, Kribhco reportedly shutting a plant and Gujarat Narmada Valley Fertilizers & Chemicals Ltd. (GNFC) reportedly receiving a force majeure notice.
India’s monthly domestic fertilizer production averaged around 2.5 Mt in 2024–25, but output typically slips to about 2.0 Mt in Q2 as plants enter the usual turnaround season amid softer seasonal demand. Producers may now bring forward maintenance schedules, yet losses are already estimated at roughly 300,000 t, increasing the system’s sensitivity to any further shutdowns.
India’s urea imports rose by 4 Mt to around 9.3 Mt in 2025. If domestic output were cut by 50% for one month across LNG-dependent plants, the additional import requirement could increase by roughly 1 Mt, as urea demand is likely to remain largely inelastic given continued affordability supported by farmer subsidies.
Gas-related disruptions could flip a self-sufficient balance in Pakistan
Pakistan relies entirely on Qatar’s LNG to meet its domestic gas needs. The fertilizer industry accounts for roughly a quarter of national gas consumption, according to Pakistan’s Ministry of Energy (Petroleum Division).
Market contacts indicate that over 70% of Pakistan’s urea output is based on domestic gas fields, with only four producers, around 1.6 Mt/y of capacity in total, connected to the R-LNG network.
In a sign that LNG-related disruption is already filtering through, Sui Northern Gas Pipelines Limited (SNGPL) is understood to have notified Agritech that the LNG supplier had declared a “potential event of force majeure”, prompting Agritech Limited (urea capacity 470,000 t/y) to halt production. SNGPL supplies gas to Agritech as well as Fatima Fertilizer Co. Ltd. (FFCL; capacity: 500,000 t/y) and Pak-Arab (100,000 t/y).
Pakistan is generally considered self-sufficient in urea, but if disruptions broaden across the domestic sector, it could quickly translate into incremental import demand, adding to short-term pressure in global urea trade flows.
Pakistan consumes more than 6 Mt of urea each year, most of which is typically supplied by domestic production. Exposure to imported LNG is concentrated in four producers with a combined capacity of 1.6 Mt/y. If all four plants were to lose feedstock for one month, the resulting production shortfall is estimated at around 135,000 t. Nevertheless, risk to other producers due to relocation of domestic gas use pose a risk.
Bangladesh: Qatar gas disruption adds to an already fragile production base
Bangladesh sources around 65% of its gas from Qatar, and the recent interruption to Qatari exports is understood to have contributed to the shutdown of four facilities.
That said, outages are not uncommon in Bangladesh’s fertilizer sector. Domestic production has been volatile in recent years, with average utilisation near 25% in 2024–25, and at least three plants reportedly offline for 5 to 9 months in 2025. As a result, any incremental uplift in import requirements is not expected to be sharp.
TTF gas rally lifts European nitrogen production costs
Heightened war-risk premiums, driven by strikes on Qatari gas infrastructure and a slowdown in traffic through the Strait of Hormuz, have pushed TTF gas prices sharply higher. Prior to the escalation, TTF closed at $11/MMBtu on Friday 27 Feb; by 6 March, prices are trading around $17/MMBtu, an increase of 55% in less than a week.
This move has lifted European nitrogen production costs. Ammonia site costs are up 48% week-on-week to $660/t, AN production costs are estimated at $360/t, and urea site costs are calculated at $480/t.
In response, LAT Nitrogen has cut ammonia output in France and Austria to technical minimum levels, while maintaining normal operating rates at downstream fertilizer units to meet spring application demand.
Despite the cost inflation, profitability has broadly held as product prices also moved higher, with average urea and AN profitability estimated at $262/t and $270/t, respectively.
Further upside risk to gas prices remains a key watchpoint, as profitability, particularly for AN, often drives producers’ decisions on whether to curtail operations. With ammonia CFR NW Europe at $720/t, ammonia production is expected to be around break-even at approximately $18.5/MMBtu. By contrast, current AN France pricing of $628/t implies a significantly higher gas-price tolerance, with break-even estimated at above $34/MMBtu, while FCA France urea price at $738/t is estimated to break even at above $30/MMBtu.
Egypt production steady for now but risk looms
The temporary shutdown of Israel's Leviathan, Tamar and Karish gas fields poses a direct threat to Egyptian urea production, which supplements domestic gas and imported LNG feedstock.
Even though production is currently understood to be unchanged, any disruption to Egyptian output would remove nearly 500,000 t per month from export availability.
Will China deliver the much needed supply relief?
China’s urea exports have been constrained since the start of 2026 in line with export policy, as the domestic application season is underway. With production remaining strong, domestic oversupply has kept prices below $270/t. Despite this, CRU does not expect China to re-enter the export market before May 2026, when the domestic season typically eases. This is assuming coal prices remain manageable and international price volatility subsides.
Food security remains the government’s overriding priority, and limiting exposure of the domestic market to global price swings is central to that agenda. If thermal coal prices rise materially, Chinese production costs would increase, lifting the domestic market-clearing price and reinforcing the focus on domestic supply.
Pressure on near-time outlook continues
Urea prices have surged back to levels last seen in 2022 Q3, following Russia’s invasion of Ukraine. In Egypt, prices have increased by $170/t to a high end of $665/t, while the latest sale in Algeria is reported at $680/t. In the US, NOLA values have reached $620/st, and indications from Baltic Sea suppliers have moved up to $550–565/t. East of Suez, South-east Asian producers have marked a jump of $160/t to $650/t FOB.
Global supply risks are mounting, with roughly 40% of the export market at risk as the Middle East (1.8 Mt per month including Iran) remains disrupted and China stays absent from exports. Further pressure could come from reduced domestic production in import-dependent markets such as India, Pakistan, and Bangladesh. If disruptions extend, and persist, for one month, incremental import needs could total to 1.5 Mt, amplifying near-term tightness. The knock on implications for the global market could be drastic, and some regions may consequently suffer from fertilizer shortages. Given the direct importance of nitrogen for crop yields, food production may suffer.
At the same time, seasonal demand in the United States and Europe is underway, with additional buying interest expected from Thailand, the Philippines, Mexico, Australia, and other Latin American markets. India, despite a successful mid-February tender, is expected to return to the import market as shipment force majeure claims and domestic production disruption tighten availability. Pakistan, which is not typically a regular importer, may also be pushed into the market if domestic supply is impacted.
Although Brazil and Turkey rely heavily on Iran for urea supply, the fact that both markets are currently in their off-season should limit any immediate buying pressure.
Further details on demand regions such as India, US, and Europe is provided here.
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