Economy
Iran war disrupts fertilizer supplies, poses risk for food security
With production across Gulf countries halted and gas prices climbing, the war in Iran and the wider Middle East is disrupting fertilizer supplies and raising concerns over global food security.
A third of fertilizer shipped by sea comes from the region and cannot make it to the global market as Iran has effectively closed the Strait of Hormuz.
That has sent global fertilizer prices soaring, with the U.N. expressing concern in particular about the impact on developing countries.
Gulf as key manufacturer
Natural gas is a key feedstock to make artificial fertilizers, and with its ample gas supplies, the Gulf region has become a key manufacturer.
The region produces nearly half of the sulphur sold worldwide and a third of urea, “the most widely traded fertilizer of all,” said Sarah Marlow, global editor for fertilizers at Argus Media.
It also produces a quarter of globally traded ammonia, another feedstock for fertilizer production, she said.
Major food-producing nations like the U.S. and Australia source much of their urea and phosphate from the Gulf nations.
Brazil, the world’s leading soybean producer, imports most of its urea from Qatar and Iran, which also exports to Türkiye and Mexico.
India relies upon Saudi phosphate.
Asia, in particularly dependent on the Gulf: it imports 64% of its ammonia and more than 50% of its sulphur and phosphates from the region, according to 2024 figures from Kpler.
But since the start of the conflict, which has seen Iran launch retaliatory strikes against its Gulf neighbors following U.S. and Israeli strikes, production has had to be shut down at fertilizer production facilities, particularly in Qatar.
And the Strait of Hormuz remains largely unnavigable.
A Chinese vessel loaded with sulphur was able to leave on March 7, but around 20 other ships were still waiting as of the middle of the week, according to Kpler, which tracks commodity flows.
Global repercussions
While Europe appears at first blush to be less exposed, sourcing just 11% of its urea from the region, it will likely be impacted indirectly.
Morocco is a big supplier of phosphorus-based fertilizers to Europe, but is dependent on the Gulf for sulphur used in their manufacturing.
The EU also imports 26% of its urea from Egypt, but the country is confronted by a halt of natural gas supplies from Israel by pipeline, pointed out Argus Media consultant Arthur Portier.
“Egyptian urea has gone from $500 per ton at the start of the war to more than $650. There is a direct impact on the price of fertilizer,” for European farmers, he said.
Other countries that source their gas from the Middle East to produce fertilizers, such as India, have had to ration supplies to their factories.
Bangladesh has temporarily shut down five out of six of them.
The U.N. expressed concern this week about access to fertilizers in some of the poorest countries.
Crop production at risk
Artificial fertilizers provide nitrogen, phosphorus and potassium necessary for crop growth.
For nitrogen-based fertilizers such as urea, ammonium nitrate and potassium, “global demand never ceases to increase, driven by Asia,” said Sylvain Pellerin at INREA, a French agricultural research institute.
INREA models that without these three key fertilizer inputs, global crop production would fall by a third.
But nitrogen fertilizers require natural gas for their chemical synthesis, and a lot of energy.
As for sulfur, it is a co-product of the oil and gas industry.
“Where there is gas, you will find urea and ammonia,” said the Argus’s Marlow.
Production of phosphorus-based fertilizers starts with phosphate rock, of which Saudi Arabia supplies 20% of the world’s total, but currently it is unable to ship it.
Uncertain outlook
In addition to the uncertainty about how long the war will last, the other question is the amount of damage that fertilizer production facilities will suffer from the fighting.
Repairs and reconstruction of facilities could considerably delay a return to normality once the fighting ends.
While the immediate needs of farmers are more or less covered, there are questions about the sowing season in the southern hemisphere that begins in June.
Portier said the war could be the spark for Europe to develop a fertilizer supply strategy.
Following the surge in fertilizer prices following the Russian invasion of Ukraine, European farmers reduced their consumption and diversified their suppliers.
The European Commission is preparing a fertilizer action plan for this year.
Gold is known as a top safe haven asset in times of volatility, but with the war in the Middle East, this classic standing has been challenged as investment volumes fell in the first quarter, industry data showed Wednesday, as the conflict forced some investors to liquidate holdings to raise cash.
Investment volumes fell by 5% during the quarter, according to the World Gold Council (WGC), despite gold having set a record high in January as investors sought refuge from a weak dollar and U.S. President Donald Trump’s erratic policy shifts.
“Hefty outflows in March reversed much of the sizable January and February inflows” into gold exchange-traded funds (ETFs), an easy means to invest in the precious metal, the council said in its quarterly report.
And that was linked in particular to North American funds.
“Oftentimes, because gold is so widely accepted, it is the first thing that you sell when you need a certain access to cash or to liquidity,” said World Gold Council expert Juan Carlos Artigas.
Following the U.S.-Israeli attacks on Iran at the end of February, Tehran closed traffic through the Strait of Hormuz, through which a fifth of the world’s oil and liquefied natural gas (LNG) normally flows.
That sent oil and gas prices rocketing higher and disrupting markets, forcing many investors to raise cash to settle their positions.
The prospect of the U.S. Federal Reserve (Fed) raising interest rates in response to higher inflation boosted the dollar, making gold more expensive for investors who don’t hold dollars.
If demand for gold dropped by volume, the value of purchases jumped by 62%.
Gold touched a new record just shy of $5,600 per ounce at the end of January, and averaged $4,873 per ounce over the quarter.
High prices, driven largely by investment holdings, hit demand for jewellery, however.
The jewelry market was also disrupted by the war, with the Middle East a key shipping hub.
Gold demand in Türkiye reached a new record in value terms in the first quarter, driven by strong investor appetite for bar and coins, industry data showed on Wednesday.
The precious metal is seen as a safe-haven asset in times of volatility, and Turks have long seen it as a portable, tangible store of wealth.
Bar and coin demand in Türkiye rose 29% year-over-year in the January-March period to 26.1 metric tons, according to a report by the World Gold Council (WGC).
That marked the highest level in seven quarters.
In value terms, the bar and coin demand hit a record $4.5 billion, based on an average gold price of about $4,872 per ounce during the quarter, the report said.
Gold touched a new record just shy of $5,600 per ounce at the end of January, as investors sought refuge from a weak dollar and U.S. President Donald Trump’s erratic policy shifts.
However, it has been declining since late February after the Iran war forced some investors to liquidate holdings to raise cash.
Türkiye has among the highest levels of household gold ownership in the world. Record gold prices are said to have lifted the value of the Turks’ holdings to nearly half the size of Türkiye’s $1.57 trillion economy.
The precious metal, given as gifts at weddings and passed down through generations, is a hedge against inflation and a permissible investment under Islamic tradition that spurns interest-bearing banking.
According to the Turkish central bank, about $600 billion of the total stock is “under‑the‑mattress,” or “under-the-pillow” in Turkish: gold held by households and companies outside the banking system.
Worldwide, gold demand also reached record levels in monetary terms in the first quarter, according to the WGC.
Including over-the-counter (OTC) transactions, the demand increased 2% year-over-year to 1,231 tons in the first quarter, while the total value of demand surged 74% to a record $193 billion as rising prices boosted market volumes.
Physical investment demand, including bars and coins, climbed 42% annually to 474 tons, representing the second-strongest quarterly performance on record. The increase was largely driven by Asian investors seeking protection against market volatility and inflation concerns.
Gold-backed gold exchange-traded funds (ETFs), an easy means to invest in the precious metal, recorded inflows of 62 tons during the quarter. However, the figure remained well below the 230 tons recorded in the first quarter of 2025, mainly due to heavy outflows from U.S.-based funds in March.
Central banks remained net buyers of gold despite increased selling activity during the quarter, purchasing a net 244 tons, up 3% from a year earlier.
High prices, driven largely by investment holdings, and the Iran war hit demand for jewellery, however.
The WGC said jewelry demand volumes fell 23% from a year ago. Total spending still increased 31% as higher prices offset lower purchases.
Following the U.S.-Israeli attacks on Iran at the end of February, Tehran closed traffic through the Strait of Hormuz, through which a fifth of the world’s oil and liquefied natural gas normally flows.
That sent oil and gas prices rocketing higher and disrupting markets, forcing many investors to raise cash to settle their positions.
The prospect of the U.S. Federal Reserve (Fed) raising interest rates in response to higher inflation boosted the dollar, making gold more expensive for investors who don’t hold dollars.
The process of UniCredit’s takeover of Germany’s Commerzbank is “unstoppable” and will prevail because the business logic is clear, the chief executive of the Italian bank said on Wednesday.
“But if it doesn’t work out, someone else will come along. That’s the reality of the market. Consolidation is inevitable,” Unicredit CEO Andrea Orcel told an interview with Frankfurter Allgemeine Zeitung.
UniCredit and Commerzbank have been in a standoff since 2024, when the Milan-based bank began building up a stake in the German lender and pressed for a merger.
UniCredit currently owns a 27% stake in Commerzbank, making it the largest shareholder in the Frankfurt-based bank. Including derivatives, the stake is 32.64%, according to a filing last week.
A direct stake of more than 30% treshold would trigger a mandatory takeover offer under German law.
In mid-March, UniCredit announced a voluntary share exchange offer for all outstanding shares.
Commerzbank has been resisting the Italian bank’s advances, aiming to remain independent. Its management, employees and the German government all oppose a potential hostile takeover.
The German government itself owns 12% of the bank’s shares.
Orcel earlier argued that consolidation is needed to create stronger European banks capable of competing with large U.S. rivals.
UniCredit shareholders are due to vote on a required capital increase for the bid at an extraordinary general meeting on May 4.
Commerzbank has said discussions with UniCredit had failed to demonstrate benefits beyond what it could achieve independently, while also warning of significant execution risks tied to a merger.
It also criticized UniCredit for acting without prior coordination, saying this had undermined trust.
Commerzbank plans to present updated financial targets alongside its first-quarter results on May 8.
European airlines are confronting their most serious test since the COVID-19 crisis, as the war in Iran drives up jet fuel costs and disrupts travel across the Middle East, threatening the summer holiday season.
Carriers have largely been riding out the crisis with hedges that have tamed costs, even as jet fuel prices have risen nearly 84% since the start of the conflict on Feb. 28, but they could face shortages if the war does not end soon.
“There is a risk that we’ll see rationing of fuel supply, particularly in Asia and Europe,” Willie Walsh, head of the International Air Transport Association (IATA), told Reuters on Tuesday, while adding that supply remained robust for now.
Walsh said, however, that the situation was not yet as bad as the disruption caused by the COVID-19 pandemic in 2020, which led to travel demand plummeting and hundreds of billions of dollars in losses for the aviation sector.
“I think COVID was on a completely different scale,” Walsh added. “What we’re seeing here is, in effect, a cost issue for the airlines. The underlying demand for aviation remains robust, and that’s a positive.”
Jet fuel price hedges start to run out
The war has hit airline shares, with on-again-off-again peace talks to end the conflict and reopen the critical Strait of Hormuz to normalize global oil and gas flows in what is the worst energy crisis in decades.
Airlines are now warning about their hedges – which help lock in set prices – running out, with outlooks increasingly murky as people delay booking travel or make plans closer to home to avoid potential disruption and higher fares.
Sweden’s Energy Minister Ebba Busch on Tuesday fired an “early warning” about potential jet fuel shortages despite good current supply, cautioning Swedes to think through travel plans.
Ryanair CEO Michael O’Leary, however, played down concerns. “We think the risk of a supply disruption is receding,” he told Reuters, citing conversations with suppliers across Europe earlier in the week.
European budget airline Wizz Air CEO Jozsef Varadi said on Monday that summer bookings were strong. However, easyJet and tour operator TUI announced drops in forward bookings and issued profit warnings in recent weeks.
Varadi, meanwhile, cautioned that even an end to the conflict would not quickly resolve high fuel prices.
“Even if the war is stopped in Iran, I don’t think this is going to put the fuel price back to what it used to be two months ago,” he told reporters in London.
Air France-KLM, British Airways-owner IAG and Lufthansa are set to report first-quarter results starting this week. Between them, they have raised prices and cut flight capacity in response to the war.
Winners, losers
Gulf airlines have been the hardest hit, with data from Cirium Ascend showing that flights operated by Middle Eastern operators dropped 50% year-on-year in March, while bookings for the second and third quarters connecting via the main Gulf hubs are down 42.5%.
Global passenger capacity, however, remains up near 2% so far in 2026 versus 2025, it said, underscoring wider resilience.
The crisis has, though, dampened margins and sharpened the gap between weaker and stronger players. Some have dodged the impact. Finland’s flag carrier Finnair said the crisis had so far had a net positive impact, with more demand for its Asian flights. Budget airline Norwegian on Tuesday brushed off jet fuel supply risks.
Cirium Ascend’s head of valuations, George Dimitroff, said airlines have adapted and evolved through various crises and agreed COVID-19 had been “a much bigger hit.”
“They’re much, much more agile now than they were in the previous decade and let alone two or three decades prior when they were pretty hopeless at it,” Dimitroff said.
Markets in Türkiye are set to focus on a busy economic calendar in May, with investors closely watching a series of key data releases, central bank messages and policy signals from senior economic officials.
Attention will initially turn to Trade Minister Ömer Bolat, who is expected to announce April foreign trade figures at an event in the Black Sea province of Ordu on Saturday. Goods exports stood at $21.9 billion in March, marking a roughly $1.5 billion decline compared with a year earlier. Imports rose 8.4% to $33.2 billion.
The decline in shipments had been attributed to the Middle East conflict, the Eid al-Fitr holiday and the calendar effect.
The Turkish Statistical Institute (TurkStat) will release April inflation data on Monday, a key indicator for markets assessing the pace of disinflation and future monetary policy.
The Iran war sent energy prices soaring, posing a challenge for import-heavy economies like Türkiye, where inflation still eased to 30.87% in March. Month-over-month, consumer prices rose 1.94%.
Investors will also monitor March industrial production data, due on May 8, after the index rose 2.6% month-over-month and 2.2% year-over-year in February.
On May 13, the Central Bank of the Republic of Türkiye (CBRT) will publish March balance of payments data. Türkiye posted a current account deficit of $7.5 billion in February, while the current account excluding gold and energy recorded a $1.46 billion shortfall.
Housing sales data for April will be released on May 14. Total home sales in March declined 2.1% year-over-year to 113,367 units.
The Treasury and Finance Ministry is scheduled to announce the April central government budget data on May 15. In March, the budget showed a deficit of nearly TL 223 billion. Budget revenues totaled TL 1.23 trillion, while expenditures amounted to TL 1.46 trillion.
Additional data due on May 18 include consumer confidence and first quarter labor statistics. Consumer confidence edged up 0.5% in April to 85.5.
Markets will also watch a participation finance summit to be held on May 7 at the Istanbul Financial Center.
The event is expected to feature remarks from Vice President Cevdet Yılmaz, Banking Regulation and Supervision Agency (BDDK) Chair Şahap Kavcıoğlu, Investment and Finance Office President Burak Dağlıoğlu and Participation Banks Association of Türkiye Chair Mehmet Ali Akben.
Treasury and Finance Minister Mehmet Şimşek is also scheduled to speak in a special session.
Meanwhile, CBRT Governor Fatih Karahan will brief lawmakers at Parliament’s Planning and Budget Committee on May 5, with interest rates and inflation-fighting policies expected to dominate the agenda.
Karahan is set to unveil the central bank’s second inflation report of the year on May 14, a closely watched event that could provide fresh guidance on the inflation outlook, growth risks and the monetary policy path.
The CBRT in February kept its end-2026 interim inflation target at 16% but lifted its forecast range to 15%-21% from 13%-19% previously.
The central bank will conclude the month’s key releases with its Financial Stability Report on May 22, offering markets another readout on risks facing Türkiye’s financial system.
President Donald Trump’s approval rating has fallen to its lowest point of his current term as Americans grow more dissatisfied with his handling of the cost of living and the unpopular war with Iran, a new Reuters/Ipsos poll found.
The four-day poll completed Monday showed 34% of Americans approve of Trump’s performance in the White House, down from 36% in a prior Reuters/Ipsos survey, which was conducted from April 15 to 20.
The majority of responses were gathered prior to the Saturday night shooting at the White House Correspondents’ Association dinner, where Trump was due to speak.
Federal prosecutors have charged the accused shooter with attempting to assassinate the president.
Trump’s standing with the U.S. public has trended lower since taking office in January 2025, when 47% of Americans gave him a thumbs-up.
His popularity has taken a beating since the U.S. and Israel launched a war against Iran on Feb. 28 which has led to a surge in gasoline prices.
Only 22% of poll respondents approved of Trump’s performance on the cost of living, down from 25% in the prior Reuters/Ipsos poll.
The survey, which was conducted nationwide and online, gathered responses from 1,014 U.S. adults and had a margin of error of 3 percentage points.
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