Hormuz Strait disruptions hit 4 commodity markets beyond oil

The latest escalation in the Strait of Hormuz is threatening supply chains for fertilizer, helium, aluminum and sulfur, pushing urea prices up 6.2% in a week and more than doubling helium costs since March.

"The industry has some ability to replace the low supply from other places, but if the conflict drags on, the inventory that folks are relying on will eventually deplete," said Phil Kornbluth, a helium market consultant with over 40 years of experience.

New Orleans urea — a global benchmark — climbed 6.2% in the seven days to July 10, the biggest weekly gain in more than three months. Helium spot prices have at least doubled since March, according to Kornbluth's estimates. Aluminum billet surcharges surged at the start of the conflict and have only partially softened after an interim peace deal in June.

The disruptions extend well beyond energy markets. The Middle East accounts for nearly a tenth of global aluminum production, while Qatar's Ras Laffan complex supplied about a third of the world's helium before the conflict erupted in late February. With China imposing ad hoc export restrictions on helium last Friday and Ukrainian attacks denting Russian output, chipmakers powering the AI boom face a tightening supply of a gas essential for semiconductor manufacturing.

Fertilizer Costs Threaten Global Food Supply

The Persian Gulf is home to major fertilizer producers including Qatar Fertiliser, Fertiglobe Plc and Saudi Basic Industries Corp, whose exports depend on the Strait of Hormuz as a transit artery. The last time conflict flared in the region, India — the world's biggest urea importer — paid nearly double pre-war prices to secure supplies. This time, with the Southern Hemisphere entering its agricultural planting season, countries such as Brazil are particularly exposed. Any disruption to fertilizer supplies risks reducing crop yields, with knock-on effects for global grain prices at a time when extreme weather is also a threat.

The energy infrastructure needed to produce ammonia and urea is at risk, while shipping routes out of the Persian Gulf are under renewed pressure. Unlike the early days of the conflict, when stranded ships acted as floating storage, shipowners are now avoiding the region, threatening not just exports but production itself.

Sulfur Shortages Squeeze Agriculture and Mining

Middle Eastern oil and gas majors also produce vast quantities of sulfur, a key feedstock in phosphate fertilizer production. Supply disruptions have already forced plants in Brazil, the US and Morocco to cut output. Surging prices have thrust agricultural buyers into a bidding war with miners who rely on sulfur and sulfuric acid for copper and nickel production.

Some Middle Eastern cargoes reached India in recent weeks, helping to "ease the worst of the situation," according to Maria Mosquera, editor for sulfur products at Argus Media. But since last week, crossings through Hormuz have again come to a standstill, she said.

Helium Shortage Hits Semiconductor Supply Chain

Helium's most critical industrial application is in semiconductor manufacturing, where its unique cooling properties protect silicon wafers during chip production. The gas is difficult to replace, and chip manufacturers have been seeking alternative suppliers and drawing down inventories to offset shortfalls from Qatar's disrupted output.

Because helium is not exchange-traded, price impact is difficult to track precisely. Kornbluth estimates the spot price has at least doubled since March, with the market characterized by a "significant" supply shortage. The last time helium supply was this constrained, during the 2022 Qatar blockade, semiconductor fabrication plants reported production delays of up to six weeks across multiple facilities.

Aluminum Premiums Remain Elevated

The Middle East accounts for nearly 10% of global aluminum production, with an outsized role in specialized products like aluminum billet used extensively in car-making, construction and aerospace. While commodity-grade aluminum supply has been partially offset by logistical workarounds and rising exports from China and Indonesia, billet surcharges remain elevated. Even if producers reroute through alternative ports, additional costs and delays will likely keep premiums above pre-conflict levels.

This article is for informational purposes only and does not constitute investment advice.