Economy
German fertilizer makers, farmers hit by fallout from Hormuz crisis
As the closure of the Strait of Hormuz continues to drag the global economy, one German town has been scrambling to help make up the shortfall in fertilizer supplies.
Wittenberg, better known to many as a cradle of the Protestant Reformation, is also home to a chemical plant founded in 1915, in the midst of World War I.
At that time, the aim was to produce nitrogen for explosives and fertilizers to circumvent a blockade, which prevented certain raw materials being imported from Chile.
More than a century later, the closure of the Strait of Hormuz “shows that it’s still the same thing today – sea routes can collapse”, Christopher Profitlich, spokesperson for the SKW company, which took over the site in 1993, told Agence France-Presse (AFP).
A third of the world’s fertilizers normally pass through the Strait of Hormuz, and the World Trade Organization (WTO) has warned that the blockade there threatens global food security, particularly in Africa and South Asia.
“That’s why it makes so much sense to have production in Europe,” Profitlich said.
Domino effect
At SKW’s sprawling 220-hectare site, a 23-kilometer (14-mile) rail network transports urea, ammonia and finished fertilizers, destined for sites across Germany and elsewhere in Europe.
SKW is Germany’s largest producer of urea, an essential component of fertilizers. In one of its warehouses, a mountain of acrid-smelling white powder rises several metres high.
The plant has been running at full capacity to try to make up the shortfall in supply from the Hormuz blockade.
The company expects an increase in revenue this year of between 10% and 20%, but stresses this estimate remains uncertain because of market volatility.
SKW’s CEO Carsten Franzke says that the company is not a “war profiteer” and will probably just break even once soaring energy costs are also taken into account.
Around 80% of the company’s production is powered by gas, which has doubled in price since the conflict broke out on Feb. 28.
Like much of German industry, SKW had already been struggling with the energy crisis triggered by the Ukraine war, which starkly exposed the country’s reliance on Russian gas.
SKW posted losses three years in a row as the country strove to wean itself off cheap Russian energy supplies.
Today, the company imports natural gas from Norway, the Netherlands and the United States, but is suffering as prices rise on global markets due to a domino effect from the latest conflict.
“We can pass on the higher costs to the consumers of our products,” Franzke said.
“The problem is that our customer, the farmer, might not be able to pass these costs on,” he said.
Looming shortage
One such farmer struggling with the impact of the crisis is Gerhard Geywitz, who relies on nitrogen-based fertilizers at his farm in the southwestern state of Baden-Wuerttemberg.
Speaking to AFP in his cornfield, he said that since the war began, the price of fertilizer has jumped by 50%.
He explained that as cereal prices on the world market have remained stable, he has had to absorb the cost and can’t pass it on.
If the war drags on, Geywitz worries about “a fertilizer shortage by next year.”
“For this reason, we’ve decided to stock up now, before prices become exorbitant,” Geywitz said.
The German Fertilizer Producers’ Association (BVDM) pointed out that several European plants have closed in recent years due to costs, even before the current crisis.
“Without local producers and competitive farming, food security in Europe is seriously threatened,” the BVDM said in a statement to AFP.
“Dependence on international markets represents a certain risk,” it added.
The crisis has revived worries that European businesses in these sectors will struggle to compete with foreign rivals who face fewer constraints, particularly in terms of environmental standards.
Like many others in German industry, Franzke has called for a review of the EU’s carbon trading scheme in order to ease pressure on businesses.
The European Commission has said it is looking into the issue.
Wall Street banks posted strong second-quarter earnings, boosted by robust merger-and-acquisition advisory fees and a surge in trading revenue, though lenders cautioned about risks to the economy and financial markets.
The SpaceX initial public offering has helped. Wall Street banks, including Goldman Sachs and Morgan Stanley, played big roles in the nearly $86 billion SpaceX IPO. Banks on the SpaceX IPO raked in around $500 million in fees.
Investment banking has been a strong area of revenue growth, with mega equity offerings and multibillion-dollar transactions signaling the most bullish dealmaking environment in years. Trading continues to be strong with higher-than-usual volatility due to geopolitical conflict and uncertainty surrounding AI disruption.
“We’ve had really terrific global markets performance and investment banking performances,” said Bank of America (BofA) Chief Financial Officer Alastair Borthwick on the bank’s media call. “Business continues to feel good.”
Bank of America beat estimates for second-quarter profit, benefiting from record trading activity and a surge in dealmaking, one of five banks reporting on Tuesday.
JPMorgan Chase reported a similar theme. Big-ticket IPOs and dealmaking helped drive investment banking fees to their highest levels since 2021, while stock traders capitalized on volatile markets.
‘Booming environment’
“What’s going on in equities is a booming environment with a ton of activity, big IPOs, the AI theme, a very active environment,” said JPMorgan CFO Jeremy Barnum on the bank’s media call.
Global investment banking revenue hit $61.4 billion in the first half of 2026, a 24% jump from a year earlier, according to Dealogic data. JPMorgan remained the global leader in investment banking revenue, while Goldman Sachs was the global leader in advising on M&A.
Chip designer Cerebras’ $6.4 billion IPO and Google-parent Alphabet’s $85 billion share sale were also among the top deals in the second quarter.
“We thought the 2Q earnings were going to be very good, but they turned out to be extraordinary,” said Macrae Sykes, portfolio manager at GABF ETF, Gabelli Funds.
“We continue to believe the environment for the major banks is very constructive due to business activity, market engagement and demand for capital with average loans up around 10%.”
Bank shares were mixed. JPMorgan rose 0.7%, Citi climbed 1%, BofA gained 1% and Goldman jumped 4%, but Wells Fargo dropped 1.7%.
Still, there were notes of caution about markets.
“How fragile/dangerous/overheated/exuberant is the current moment?” asked JPMorgan’s Barnum, pointing to nominal leverage numbers and valuations being “quite high.”
“It would be naive not to be worried – but it’s easy to be worried and the market keeps going up,” he said.
Citi CFO Gonzalo Luchetti said conflict in the Middle East may affect deal activity over time, although the pipeline remains strong.
JPMorgan CEO Jamie Dimon said in the bank’s press release that “several risks are shifting below the surface like tectonic plates, including geopolitical tensions and wars, sticky inflation, large global fiscal deficits and elevated asset prices,” adding “they could also cause meaningful disruptions when they shift or collide.”
Goldman Sachs exceeded second-quarter profit expectations, Wells Fargo beat Wall Street estimates for second-quarter profit, and Citigroup reported a 45% jump in second-quarter profit and its highest quarterly revenue in a decade. Morgan Stanley will report second-quarter results on Wednesday.
“The AI-driven capex super cycle has benefited equity issuance, M&A activity and debt financing, while trading has been helped by Iran-related volatility across asset classes,” said Stephen Biggar, director of financial services research at Argus Research.
U.S. President Donald Trump reversed Tuesday his plans to charge a 20% toll on all cargo going through the Strait of Hormuz as part of the conflict with Iran a day after he announced it.
Instead, Trump said Middle Eastern countries will make investment and trade deals with the U.S.
U.S. had carried out waves of attacks for the third night in a row after Iran said it had closed the strait, prompting Trump on Monday to reinstate a blockade of Iranian shipping and propose the fee.
But just a little under five hours before the fee had been due to come into effect at 2000 GMT, Trump said the strait was open to all shipping traffic except that of Iran.
“Based on highly productive conversations with Middle East leadership, I have decided to replace the 20% United States Reimbursement Fee with Trade and Investment Deals that the various Gulf States will be making into the United States,” Trump said in a post on Truth Social.
The president said the investments “will be MASSIVE,” though it’s unclear if these would be new commitments relative to what Trump announced after a visit last year to the Middle East.
Oil futures prices pared their gains after the post after rising earlier on Tuesday. The worsening attacks had increased doubts that a memorandum of understanding signed last month would lead to a permanent halt in the war, which has disrupted global energy supplies and raised fears of a rise in inflation globally.
Iran had hit back by attacking a U.S. military base in Jordan with ballistic missiles, while Bahrain, which hosts a U.S. naval base, said it had fended off an Iranian aerial attack. Jordan said it had shot down four ballistic missiles and explosions were heard in Manama, Bahrain’s capital.
Before the war, about a fifth of global oil and gas traffic passed through Hormuz daily. If the U.S. were to impose a 20% fee, it could generate around $240 million a day.
The U.N. shipping agency said it opposed any fees for straits used in international navigation and that there was no legal basis for introducing mandatory tolls on strait transits.
Later on Thursday, Trump said he did not think anybody should be able to charge a fee for ships transiting the Strait of Hormuz.
“I don’t like the concept of a fee, but at the same time, it’s not fair that we’re protecting this strait for the entire world,” he said in remarks to reporters.
Recent heat waves across the European continent, which have pushed temperatures above seasonal norms, are boosting demand for heating, ventilation and air conditioning (HVAC) products, driving double-digit growth in Turkish exports to the region.
Extreme heat waves across the continent are reshaping daily life and demand for climate control products, which were once deemed luxury items.
Europe appears to be particularly exposed and vulnerable to climate change, with many countries, including the U.K., France and Spain, witnessing heat waves in recent weeks, most notably at the end of June.
European countries have reported more than 10,000 excess deaths during the record-breaking heatwave that engulfed the west of the continent in late June, official data showed recently.
The vast majority, or more than 9,000, were among people aged 65 and above, according to data published by EuroMOMO, a network backed by the European Centre for Disease Prevention and Control and the World Health Organization (WHO).
Extreme heat can kill by causing heat stroke or aggravating cardiovascular and respiratory diseases, with older people among the most vulnerable.
The rise in air temperatures has also renewed debate about air conditioning (AC) systems in Europe, with ACs now seen as an essential need during the summer months.
Investments in cooling solutions in many EU countries accelerated in residential and public buildings, workplaces, health care facilities, and educational institutions.
Consequently, European markets affected by heat waves increased orders for energy-efficient HVAC systems, including those from Türkiye.
Germany top market
Germany was the largest European market for Turkish HVAC exports in June, totaling $71.4 million, up 19.9% year-over-year, according to data compiled by Anadolu Agency (AA) from the Türkiye Exporters Assembly (TIM).
Germany was followed by Italy, where exports rose 35.1% to $30.5 million, France, up 46.3% to $28.3 million, Poland, where exports increased 10.3% to $23.7 million, and Spain, where they rose 29.3% to $23 million, the data showed.
Finland recorded the largest increase in Turkish HVAC exports at a whopping 130.7% surge, followed by Croatia with 97.3%, Latvia with 96.1%, Luxembourg with 83.6%, and Malta with 74%.
Osman Baştaş, chair of the Turkish HVAC-R Exporters Association (ISIB), told AA that rising exports confirmed the Turkish climate control industry’s strong position and competitive edge in global markets, due to demand particularly driven by the EU, as well as by the Middle East, North Africa, and Central Asia.
Baştaş said promotional campaigns targeting the U.S. and other alternative markets also had a positive impact on the sector’s exports.
“Turkish manufacturers gained a massive advantage in global markets thanks to high-quality production, flexible manufacturing capabilities, fast delivery, and a robust engineering infrastructure,” he said.
“The restructuring process in supply chains presented great opportunities for our sector due to Türkiye’s geographical proximity to Europe.”
Rising demand
Baştaş said Turkish firms achieved this success thanks to green transition investments, which have become “key competitive criteria.”
“The demand in many markets, especially in Europe, is rising rapidly for systems that are energy-efficient with a low carbon footprint and pro-environment refrigerants, something Turkish firms have been investing in for quite some time, and we expect the impact of the green transition to drive exports even further in the coming period,” he said.
Baştaş also stated that the effects of climate change have rendered climate control systems a basic necessity, not only for residential buildings but also for shopping malls, hospitals, hotels, factories, logistics warehouses, and especially artificial intelligence (AI) data centers.
“Data centers became a growing sector as AI and digitalization gained momentum, and the demand for advanced, energy-efficient HVAC systems that provide precise temperature and humidity control in these facilities is rising day by day,” he said.
“Türkiye is among those benefiting most from this transition as we see rising export demand for high-energy-efficient HVAC systems, heat pumps, ventilation equipment, heat recovery systems, automation solutions, industrial cooling systems, and data center cooling technologies,” he added.
Baştaş stated that Türkiye has become one of the world’s leading HVAC manufacturing hubs thanks to its wide product range, robust supporting industries, high production capacity, price advantage and compliance with international standards.
“Many global brands operating in developed markets are manufacturing in Türkiye, underscoring the sector’s global credibility,” he said.
He said the sector’s export performance in the first half of the year had fueled optimism in the sector for the second half, while signs such as the normalization of inventories in Europe, ongoing energy efficiency investments, and rising temperatures driving up demand for air conditioners are supporting the sector.
“We think the growth will continue in the second half as long as the current order flow and export performance are maintained,” he said.
“We also aim to raise our share in the export of high-value-added, energy-efficient, and sustainable products, and we think the rise of the Turkish HVAC industry in the global market will continue in the coming years,” he concluded.
Iraq has requested that the capacity of the Kirkuk-Ceyhan oil pipeline be nearly four times its current flows under a proposed one-year interim agreement with Türkiye, Energy Minister Alparslan Bayraktar said Monday.
The decades-old pact that governed exports through the Iraq-Türkiye Crude Oil Pipeline is due to expire on July 27. Bayraktar said last week that the sides are set to sign a 12-month agreement in the coming days to keep the pipeline open.
Türkiye had submitted a draft of a new long-term agreement to Baghdad, but negotiations had been delayed amid Iraq’s elections and the formation of a new government.
Bayraktar said the process had made it unlikely that a comprehensive deal could be concluded before the current pact expires.
“As an interim solution, we proposed signing a one-year oil transportation agreement … so that flows do not stop on July 27,” he told reporters after a Cabinet meeting.
He said the Iraqi side requested capacity of 750,000 barrels per day (bpd), compared with current volumes that stand at around 180,000 to 200,000 barrels per day.
“We said, ‘That’s fine, we will allocate 750,000 barrels per day to you.’ Within that year, we want to sign a new and more comprehensive Iraq-Türkiye Crude Oil Pipeline agreement,” he said.
Bayraktar said he discussed broader energy cooperation with Iraqi Prime Minister Ali al-Zaydi during a visit to Baghdad last week, including the extension of the pipeline to Iraq’s southern oil hub of Basra and increasing its capacity to 2.5 million barrels per day.
He said Türkiye proposed opening the route to additional regional crude supplies.
“We said that if Kuwait wants to ship its oil through this pipeline, it should be able to do so. If others in the Gulf want to use it, they can as well,” Bayraktar said.
“We also discussed building a natural gas pipeline alongside it so Qatari gas or other regional gas sources could be transported,” he added.
The Kirkuk-Ceyhan pipeline has been at the center of a long-running legal dispute between Türkiye and Iraq. A Paris-based arbitration court ruled for Ankara to pay $1.5 billion over what it said were unauthorized exports by Iraq’s Kurdistan Regional Government (KRG) between 2014 and 2018.
Türkiye, on the other hand, said the International Chamber of Commerce (ICC) had recognized most of Ankara’s demands.
Bayraktar said enforcement proceedings continue in Washington, where reciprocal claims and accrued interest will be calculated before determining whether either side owes compensation.
“There will be calculations, including interest, because our claims also date back many years. Once that is completed, the 2014-2018 period will be closed,” he said, adding that arbitration covering the period after 2018 remains ongoing.
He said the arbitration cases would form part of broader negotiations with Iraq and that several issues related to the proposed one-year agreement have yet to be resolved, while stressing Türkiye is ready to proceed once the remaining issues are settled.
Türkiye halted oil flows through the pipeline following the devastating February 2023 earthquakes, citing damage to the infrastructure. Operations resumed after repair work in September 2025.
However, exports were temporarily disrupted again during the Iran conflict before restarting on March 18.
Türkiye’s exports to the European Union surged 4.7% to $54.5 billion (TL 2.56 trillion) in the January-June period as the bloc shifted its supply chains to more reliable and closer regions during the Middle East crisis, a head of a leading commercial chamber said.
The Turkish auto sector accounted for most of the exports to the EU in the first half of the year, with $15.57 billion, according to the Türkiye Exporters Assembly (TIM).
The auto industry was followed by chemicals and chemical products at $7.1 billion, ready-to-wear fashion and apparel at $4.7 billion, and ferrous and non-ferrous metals at $4.18 billion.
Germany was the recipient of the largest Turkish exports in January through June, with $10.1 billion, up 4.3%, followed by Italy with $6.8 billion, Spain with $5.6 billion, France with $5.3 billion, and Romania with $3.7 billion.
Exports from Istanbul, the largest source of exports in the first six months of the year, to Germany totaled $3.8 billion. While Germany received the most exports from Istanbul, the country was followed by Italy, Spain, France and the Netherlands, the data showed.
Romania continued to rank among the top five EU countries that were also the largest recipients of Turkish exports, while exports from Istanbul to the country reached $1.2 billion.
Türkiye and the EU’s economic relations have grown over the years, with mutual trade volume, investment flows and product integration.
The EU is Türkiye’s largest export market and a key market for Turkish manufacturers, especially those operating in sectors such as automotive, machinery, chemicals, textiles and home appliances.
The ongoing restructuring of global supply chains is further elevating Türkiye’s potential to become a reliable production and supply hub for Europe, while factors such as the green and digital transformation, the need to diversify supply chains, and the potential updating of the customs union could further deepen trade integration between Türkiye and the EU.
Şekib Avdagiç, president of the Istanbul Chamber of Commerce (ITO), told Anadolu Agency (AA) recently that European countries were shifting their supply chains to nearby, more reliable regions, making Türkiye “a natural hub for production and exports,” as the world was going through a challenging and uncertain period.
‘New global order’
“Türkiye-EU relations must be addressed with a new approach just as political and economic developments around the globe are shaping a new global order,” he said.
Avdagiç said Europe was restructuring not only its military deterrence but also its industrial capacity, supply chain resilience, and technological independence in this climate, while the bloc’s security and economic infrastructure had become increasingly intertwined.
He said Europe aimed to reduce its foreign dependence on defense and advanced manufacturing technologies, which, Avdagiç said, some member states might not prefer to acknowledge, leading to more selective and controlled technology-sharing models with Türkiye.
“The energy security aspect of Türkiye’s relationship with Europe is also one of the most critical layers as Türkiye stands out as a sort of transit country and a regional energy distribution hub, facilitating energy flows,” he said.
“The flow of energy from the Eastern Mediterranean, the Caspian Sea, and the Middle East to European markets has become a component of geopolitical stability, which has driven Türkiye-EU relations beyond the traditional foreign policy framework into a multilayered, strategic structure.”
“This structure, through an evolving base of security, economic, and industrial policies, is shaped not only by short-term needs but also by a foundation of structural interdependence,” he added.
The South Korean government lifted its 2026 growth forecast by one percentage point to 3% on Tuesday, expecting a stronger performance driven by upbeat performances from major memory chipmakers as artificial intelligence demand soars.
Record profits from semiconductor giants Samsung Electronics and SK Hynix – whose advanced memory chips are essential for the fast-evolving AI sector – have fuelled optimism over the country’s economic outlook.
The government has unveiled an ambitious economic agenda and has said it plans to invest an expected windfall from tech giants’ taxes into public projects.
“We had initially projected this year’s real economic growth rate at 2%, but we have now revised our forecast upward to 3%,” Finance Minister Koo Yun-cheol told a Cabinet meeting Tuesday.
“Although exchange rate fluctuations could affect the outcome, per capita income is projected to remain around the $40,000 mark,” Koo added.
In a presentation slide shown during the meeting, the finance ministry called the strong semiconductor market a “boon for the economic indicators.”
However, an agile policy response is needed to address “changed economic situations, including widening wealth polarization,” the slide said.
SK Hynix and Samsung are involved in a public-private investment of 800 trillion won ($540 billion) to build a chip hub in southwest South Korea – part of broader efforts to address regional inequality.
Tuesday’s Cabinet meeting also flagged high exchange rates, interest rates and consumer prices as risks amid the continuing Middle East conflict.
President Lee Jae Myung had said on Monday that higher tax revenues, thanks to AI-driven profits, were a “golden window” of opportunity to invest strategically.
The windfall will be used to establish a “future response fund” to concentrate investment in “future industries, youth, regional development, and education,” Lee said, without giving further details.
The boom has also strengthened workers’ demands for higher pay, with Samsung Electronics avoiding a major strike in May after reaching an agreement on bonuses.
Three companies dominate the market for producing advanced memory chips: U.S. giant Micron, and South Korea’s Samsung Electronics and SK Hynix.
These chips, called high-bandwidth memory (HBM), are used in AI processors alongside powerful silicon known as GPUs to generate chatbot responses or realistic images.
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