2026 U.S.-Iran War and the Global Energy Crisis

Chapter 15: Beyond Oil

15.1 The Fertilizer Crisis

March 5, 2026, in the office of a fertilizer wholesaler in Decatur, Illinois. An employee checked the urea price from the Port of New Orleans and rose from his chair. The urea that had been $516 per metric ton on Friday, February 27, had jumped to $683 in a week. A 32% increase. By March 9, the cumulative increase had reached 77%. An analyst at CSIS (Center for Strategic and International Studies) calculated that in December, one ton of urea cost 75 bushels of corn, but in the first week of March, 126 bushels were needed. In the language of farmers, it meant they had to sell 68% more grain to buy fertilizer.

While gasoline prices occupied news headlines, the fertilizer market was reacting faster and more violently than oil.

The reason lies in scale. The Strait of Hormuz is not just an artery for oil. According to the United Nations, one-third of global maritime fertilizer trade passes through this strait. The 2025 trade map from Rystad Energy reveals its reality. As of 2025, global urea trade volume stands at approximately 50.8 million tons annually. Of this, 10.6 million tons come from countries within the strait, including Saudi Arabia, Qatar, UAE, Iran, and Bahrain. Thirty-five percent of global urea exports and approximately 30% of ammonia exports were tied to this narrow waterway.

The process of making urea cannot begin without natural gas. In the process called the Haber-Bosch process, nitrogen from the air and hydrogen extracted from natural gas are combined at high temperature and pressure to synthesize ammonia. Processing ammonia once more produces urea. The Gulf states became fertilizer powerhouses not because of superior agricultural technology. It is because natural gas is cheap and abundant. They essentially built fertilizer factories on top of gas fields. So when gas production stops, fertilizer production stops with it.

On March 2, after an Iranian drone struck Qatar's Ras Laffan LNG facility, QatarEnergy announced a halt to LNG production. When LNG stopped, the downstream production line that made urea in the same facility also shut down. Hundreds of thousands of tons of fertilizer evaporated from the market. This was compounded by a Reuters report that China had invoked restrictions on fertilizer exports to protect its domestic market. The wall of supply rose simultaneously from two directions.

The blockade extends beyond fear into agricultural timelines. Spring planting in the Northern Hemisphere concentrates between March and May. For corn, if nitrogen is not applied to the soil during the period when the stem forms just after sprouting, the cell structure fails to develop properly. The loss in harvest is permanent. Typically, it takes 30 days for a ship carrying urea to travel from the Persian Gulf to the U.S. Gulf at New Orleans. Counting backward from when the strait closed on February 28, the volume that should have arrived during the critical spring fertilization period in late March and April remained stranded at sea.

The letter sent to the White House by Zippy Duvall, President of the American Farm Bureau Federation, conveyed urgency. He requested assurance of safe passage for fertilizer transport ships through the Strait of Hormuz, and urged the temporary waiver of countervailing duties imposed on imported fertilizers, as well as emergency securing of port and rail capacity. He warned that unless the strategic supply of urea, ammonia, nitrogen, and phosphate fertilizers is guaranteed, U.S. crop production will face disruptions, which directly threatens food security and national security.

The United States has domestic ammonia production capacity and is not facing a complete gap. However, it had been relying on imports for substantial portions of urea and phosphate fertilizers. According to an analysis by North Dakota State University (NDSU), the United States imported 2 million tons of fertilizers directly from the Gulf region in 2024. Moroccan phosphate fertilizers had effective countervailing duties of up to 47% imposed since 2021 and were essentially blocked, and China had halted phosphate fertilizer exports until August 2026. In a structure concentrated on Saudi Arabian DAP (diammonium phosphate), if Hormuz closes, the U.S. phosphate fertilizer market faces difficulty finding alternatives.

Countries in worse situations lined up. Based on 2024 figures, India imported 9.8 million tons of fertilizers from the Gulf region. This represents approximately 54% of total fertilizer imports. IFFCO (Indian Farmers Fertiliser Cooperative), India's fertilizer manufacturer, was already reducing urea production due to skyrocketing LNG prices. India's monsoon season begins in June, and fertilizer demand peaks in the months just before it. If the Hormuz blockade is not lifted before monsoon, Indian rice and wheat harvests will take a direct hit.

Brazil imported 49.11 million tons of fertilizers in 2025. It is the world's largest fertilizer importing nation. Approximately 45% of urea imports were sourced from the Gulf region. Australia reached 72% of that ratio. Ethiopia was dependent on nearly all nitrogen fertilizers through supply lines via the Gulf, and this shortage coinciding with Ethiopia's planting period meant an immediate food crisis.

NDSU's comparative analysis places two crises side by side. Shortly after Russia's invasion of Ukraine in 2022, urea prices rose more than 40% and DAP increased more than 30%. However, at that time, Russian fertilizers found workarounds. Sanctions changed the direction of trade flows, but the goods themselves did not disappear from the market. 2026 is different. Gulf fertilizers are physically trapped behind the strait. There is no exit. The mechanism is fundamentally different.

The fertilizer crisis reaches the dinner table with a time lag. When fertilizer prices rise, farmers reduce usage or switch crops to soybeans that consume less nitrogen. Either way, corn harvests decline. Because corn is the basic ingredient in livestock feed, rising corn prices bring up meat and dairy prices. Corn is also the raw material for bioethanol and is used broadly in processed foods in the form of high-fructose corn syrup.

The analysis by IFPRI (International Food Policy Research Institute) frames it this way. The immediate food security impact of the Hormuz blockade is regional. This is because the Gulf countries themselves import most of their grains and oilseeds through the strait. However, if the blockade is prolonged, a combination of reduced harvests due to fertilizer shortages and rising energy costs could reignite global food inflation. Energy costs constitute a significant share of the production costs for crops and livestock, and are directly reflected in post-harvest processing, transportation, refrigeration, and packaging expenses.

An analyst named Heyl from Ninety One asset management explained in a CNBC interview that in early 2026, the market has relatively high baseline food inventories that can provide some buffering, but if agricultural harvests hypothetically decline by just 5% this year, food inflation will certainly occur even if not to the point of famine, and emerging nations will absorb the shock first.

Chris Rollinson, Vice President of CRU, was more direct. Thirty percent of global urea trade comes from Iran and countries within Hormuz's sphere of influence, and that volume is currently unable to move in the market. Because fertilizer goes through long supply chains, if farmers fail to secure necessary urea in time, crop harvests will inevitably decline, he added.

When a 21-mile waterway closes, cornfields on the opposite side of the globe wither. This is the reality of the fertilizer crisis in March 2026.

15.2 Naphtha Shortage

The day naphtha spot prices in the Singapore petrochemical market broke through $1,000 per ton was March 25. Sixty percent above prices one month earlier. In Northeast Asia (C&F Japan basis), trading occurred between $1,010 and $1,050. According to a Seoul Economic report in Korea, a Yeocheon NCC official stated that naphtha prices, which had been around $600 per ton before the conflict, had roughly doubled to over $1,100.

Naphtha is one of several components that emerge when crude oil is distilled in a refining tower. A light petroleum fraction with a lower boiling point than gasoline. Most people have never heard of this name. However, when naphtha undergoes thermal cracking, ethylene and propylene are produced, and these two substances become the starting point for all plastics, synthetic fibers, and synthetic rubber on Earth. This is why the industry calls naphtha the 'Mother of all feedstocks.'

The Middle East accounts for approximately 22% of global petrochemical production capacity. One hundred and ninety-three petrochemical complexes are in operation, and all products manufactured in these plants exit to the outside world through the Strait of Hormuz. Eighty-four percent of Middle East polyethylene exports pass through this strait. According to Drewry's analysis, if the blockade is prolonged, 24% of global maritime naphtha volume disappears.

As Saudi Arabia's Ras Tanura refinery, UAE's Ruwais complex in Abu Dhabi, and Qatar's Pearl GTL plant came under the range of drones and missiles or were directly struck, millions of barrels of refining production halted. Asia's naphtha cracking centers (NCCs), facilities that thermally crack naphtha to extract ethylene and other products, floundered without raw materials.

The reactions came in sequence. On March 5, the ethylene cracker in Huizhou, China, a joint venture between Shell and CNOOC (China National Offshore Oil Corporation), stopped operations and notified customers of indefinite suspension of polyethylene shipments. On March 6, China's Wanhua Chemical declared force majeure on TDI and MDI, core intermediaries for polyurethane. On the same day, Japan's Mitsubishi Chemical Group began reducing production at its Kashima and Mizushima ethylene crackers. Japan depends on imports for more than 60% of its naphtha, and 70% of that comes from the Middle East. On March 10, Taiwan's Formosa Petrochemical declared force majeure. In Korea, Yeocheon NCC declared force majeure, and Lotte Chemical and LG Chem also warned customers they might follow the same measure. According to Korea International Trade Association statistics, more than 50% of Korea's naphtha supply came from the Middle East. A Yeocheon NCC official stated that approximately 70% of the supply volume passes through Hormuz, making procurement difficult due to the blockade, which caused operating rates to drop to the lowest level.

Jim Fitterling, Chairman and CEO of Dow, spoke at the CERAWeek conference held in Houston. The effective closure of the Strait of Hormuz has blocked nearly 20% of global petrochemical production capacity. The die has already been cast for what will happen to the market for the rest of this year. A supply chain collapse similar to what we saw during Corona is occurring, and it could take 250 to 275 days for normalization. Things will not reverse in an instant.

Fitterling also predicted the order when the strait eventually opens. Because more than 300 of the approximately 430 detained vessels are tankers, oil and gas will exit first. Next comes fertilizers for agriculture and food supply. Petrochemical raw materials will be placed somewhere down on that list, he said. Because petrochemical cargo ships take 4 weeks to reach Asia, even after the strait opens, it will take considerable time to clear logistics from the Arabian Gulf.

In an interview with Fortune, Kurt Barrow, Vice President of S&P Global, said: Asian plants' force majeure declarations are beginning to show, but shortages are not yet visible in Home Depot stores. However, that possibility exists. Chemicals go into everything.

The statement 'everything' is not hyperbole when you list the reasons. Polyethylene derived from ethylene becomes food packaging film, milk carton coating, and garbage bags. Polypropylene derived from propylene becomes automobile bumpers, washing machine interiors, and filter layers in masks. Styrene becomes disposable cups and building insulation. PVC (polyvinyl chloride) becomes water pipes, window frames, and electrical wire coverings. A report from India stated that PVC prices rose 78% over the month of March, and Formosa Plastics declared force majeure on multiple ethylene downstream products as of April 1.

Consider hospitals. IV bags, syringes, blood collection tubes, catheters, surgical gloves, sterile packaging materials. All plastic. Modern medical systems cannot control infections or perform surgery without sterile, disposable plastic instruments. When naphtha is cut off, the raw materials for these items dry up.

The asymmetry of the crisis becomes prominent. American petrochemical plants use ethane derived from shale gas rather than naphtha as raw material. Ethane crackers are not directly affected by the Middle East situation. U.S. plants were returning to full operation, and margins were rapidly expanding. The cost gap between U.S. ethane-based polymer production and Asian naphtha-based production widened to more than $1,200 per ton. The Western Hemisphere was reaping a windfall while the Eastern Hemisphere faced existential threats. A 'two-speed economy' was born.

An LG Chemical official said in an emergency briefing held in the National Assembly: It would have been good if the government had established a stockpiling system for naphtha as it did for crude oil and LNG. Ethylene is called the 'rice of industry,' a core raw material, but there is no stockpiling system.

When the rice of industry runs dry, factories stop, packaging materials disappear, and hospitals face shortages of medical devices. The statement that there is almost nothing without plastic is not an exaggeration. It is simply the compression into one sentence of the connection structure of modern manufacturing.

15.3 Helium and Aluminum

Gas that makes balloons float. That is all most people know about helium. In March 2026, when an Iranian missile struck Qatar's Ras Laffan industrial complex's LNG facility, the world was shocked to learn that approximately 20% of global LNG supply had evaporated. In the shadow of that shock, the semiconductor industry and hospitals were screaming. The cause was helium.

Qatar produced approximately 63 million cubic meters of helium in 2025. This is one-third of global production of approximately 190 million cubic meters. The United States is number one globally with 81 million cubic meters, and Qatar is number two. After that come Algeria and Russia, but Russian helium is effectively blocked from Western markets due to U.S. and EU sanctions.

Helium is a byproduct that emerges when natural gas is mined. It is naturally separated during the ultra-low-temperature separation process that creates LNG. There is no plant that produces helium alone. When LNG production stops, helium production automatically stops with it. Saad Al-Kaabi, CEO of QatarEnergy, said: To resume production, hostile activities must first cease.

The task helium performs in semiconductor manufacturing is precise. When etching circuit patterns onto a silicon wafer (the substrate of semiconductor chips), the temperature of the wafer surface must be maintained at an extremely constant level. Helium is a gas that transfers heat rapidly, so by blowing helium onto the back of the wafer, heat is removed and temperature is evened out. Jacob Feldgoize, an analyst at Georgetown University's Center for Security and New Technology, says there is no substitute for helium in this process. Helium is also used in the purge process, which removes toxic residues left after cleaning.

South Korea's exposure is highest. According to the Korea Trade Association, Korea sourced 64.7% of its entire helium imports from Qatar in 2025. Korea is the country where Samsung Electronics and SK Hynix produce approximately two-thirds of the world's memory semiconductors. Taiwan's dependence on helium from Gulf Cooperation Council (GCC) countries reaches 69%. TSMC, Samsung, SK Hynix. If helium does not flow into the production lines of these three companies, neither iPhone chips nor NVIDIA's AI server chips can be manufactured.

Helium consultant Phil Kornbluth explained the physical constraints of this crisis at a March 4 Gasworld webinar. Approximately 2,000 specialized helium transport containers are in circulation worldwide. A considerable number of these containers are stranded in Qatar or stuck on cargo ships. Containers can hold liquid helium for 35 to 48 days. After that period, helium evaporates. Even if the strait opened tomorrow, supply normalization would take at least another two months, Kornbluth predicted. It is because the process of repositioning containers and reverifying supply relationships would take several months.

According to a Scientific American report, at the time this crisis arrived, the helium market was actually in a surplus state. Having weathered four previous shortage incidents, semiconductor companies had expanded inventories and improved recycling systems. SK Hynix stated it had diversified supply and secured sufficient inventory, and TSMC said it does not anticipate meaningful impact at the present time.

However, the issue is duration. If it ends quickly, the market will weather it with inventory. If it drags on, the story changes. According to Kornbluth, if it lasts more than two weeks, industrial gas distributors must relocate ultra-low-temperature equipment and newly verify supply relationships, a process that takes several months even after Qatar production resumes. The amount of helium consumed each week by fabrication plants in Korea and Taiwan becomes irrevocably reduced, and wafer yield drops accordingly.

Hospitals face the same crisis. The superconducting magnets inside MRI machines operate at 269 degrees below zero, just above absolute zero. Maintaining this temperature requires thousands of liters of liquid helium. MRI safety consultant Tobias Gilke said that without sufficient helium, the scanner cannot function and becomes merely an expensive paperweight. About 40,000 to 50,000 MRI machines operate worldwide. When one stops, 20 to 30 scans disappear in a single day.

Priorities function. When there is a shortage, suppliers distribute to the most important places first. MRI is medical use, so it receives high priority in distribution, and semiconductors rank high as well. In Conblues' words, party balloons might get nothing.

Next to helium is aluminum. Aluminum is obtained by extracting alumina from bauxite ore, then melting it through electrolysis. The amount of electricity used in this process is enormous, which is why aluminum is called 'solidified electricity.' Middle Eastern Gulf countries produce aluminum by making electricity from cheap natural gas. In 2024, aluminum production in the Gulf region was about 6.3 million tons,8 to 9 percent of global production.

War struck this structure. Bahrain's Alba, one of the world's largest aluminum smelters, halted shipments to some customers due to disrupted transit through the Strait of Hormuz. Norsk Hydro declared force majeure on Qatar's Qatalum smelter and entered a controlled shutdown due to a halt in natural gas supply. Full restart could take six months to a year.

Smelters outside the Middle East also suffer. When LNG and crude oil fail to arrive, power prices spike in Europe and Asia, and aluminum smelters,where electricity costs more than 40 percent of production cost,face losses the more they operate. Engine blocks for automobiles, fuselages for aircraft, frames for solar panels, aluminum cans, electrical wires. It is difficult to find an industry that does not use aluminum.

The incident of Qatar's LNG pipeline rupture led to wafer yield problems at Samsung Electronics semiconductor plants thousands of kilometers away, canceled MRI appointments at Mount Sinai Hospital in New York, and halted aluminum shipments from Bahrain smelters. The connection is singular: natural gas. When gas stops, LNG stops. When LNG stops, helium disappears. When power cuts off, aluminum furnaces cool. A single blow branches into three directions,a ruthless butterfly effect.

15.4 Sulfur and U.S. Defense Industry

In March 2026, the Modern War Institute at West Point Military Academy released an analysis titled 'The Chokepoint We Missed: Sulfur, Hormuz, and a Threat to Military Readiness.' The title speaks for itself. Military strategists have run Hormuz Strait closure scenarios through wargames for decades, but they overlooked how a substance like sulfur could become the stranglehold on weapons production.

Sulfur is a byproduct that emerges as an impurity when refining petroleum and natural gas. Sulfur filtered out during the desulfurization process at refineries accumulates as yellow solid lumps, loaded onto ships and sent around the world. The Middle East accounts for roughly 24 percent of global sulfur production, and about 50 percent of worldwide maritime sulfur trade passes through the Strait of Hormuz. After Operation Epic Fury began, this entire volume became trapped. Sulfur prices nearly doubled since the start of hostilities.

The importance of sulfur lies in sulfuric acid. When sulfur burns, it becomes sulfur dioxide, and when oxidized, it becomes sulfur trioxide; mixed again with water, it becomes sulfuric acid. Sulfuric acid is one of the foundational working chemicals of industry. The United States consumes roughly 90 percent of its sulfur in the form of sulfuric acid.

Sulfuric acid plays a critical role in two places. First, fertilizer. All phosphate fertilizers,DAP, MAP, TSP,require sulfuric acid. Sixty percent of global sulfuric acid demand comes from the fertilizer industry. If Hormuz closes and sulfur supply stops, sulfuric acid for fertilizer becomes scarce, deepening the fertilizer crisis from section 15.1 through a second pathway. NDSU calls this the 'sulfur cascade.' Hormuz closure halts sulfur exports, sulfur shortage reduces phosphate fertilizer production in countries like China, Morocco, and Indonesia that have no direct connection to the conflict,a sequential collapse.

Second, the extraction of critical minerals. Among the methods for separating materials like copper, nickel, cobalt, and uranium,so-called critical minerals,from ore is a process called leaching. Ore is soaked in sulfuric acid to dissolve the metals. The Democratic Republic of Congo and Zambia's Copper Belt, which account for most of the world's cobalt mining, and Indonesia's high-pressure acid leach (HPAL) projects, which supply more than half the world's battery nickel, all consume enormous quantities of sulfuric acid. Indonesia depended on imports for roughly 75 percent of the sulfur it needed. Without sulfur arriving, nickel and cobalt cannot be extracted from ore.

Analysis from the Soufan Center connects this chain to the defense industry. Cobalt and copper are the backbone of modern military equipment,from artillery shells to anti-tank weapons, jet engines, radar, guidance systems, and stealth technology. If sulfuric acid shortages disrupt the refining of cobalt and copper, production of weapons made from these metals declines. Since Operation Epic Fury began, the U.S. military has expended hundreds of Tomahawk and interceptor missiles. Replacement orders went to defense contractors like Lockheed Martin and Raytheon, but they returned the answer that they could not guarantee delivery schedules due to disruptions in critical minerals and specialty chemicals.

According to one estimate by Foreign Policy, replacing a single Raytheon radar destroyed by Iranian missiles in Qatar could take up to eight years and cost 1.1 billion dollars. The gallium needed to manufacture that radar is a substance China has placed under export controls. When sulfur shortage, gallium controls, and cobalt refining disruption overlap, the situation becomes one where the ability to design weapons exists but there is no physical ability to produce them.

West Point's analysis explains this through a concept called 'prelogistics.' Military strategists have traditionally focused on logistics: how to supply weapons and ammunition to the battlefield. But prelogistics is a step further back: whether the supply of basic materials and chemicals needed to manufacture weapons is possible. This is the question. In peacetime, this is an unremarkable dependency. The Pentagon had never considered that a substance like sulfur could become the stranglehold on military readiness.

A statement cited by Wikipedia summarizes the situation. The U.S. defense industry is experiencing a 'near-total' disruption of critical minerals supplies through the Strait of Hormuz.

There is a contradiction. The United States sent aircraft carriers and bombers to bomb Iranian military facilities. To refill those bombs, cobalt, copper, and sulfuric acid are needed. To refine cobalt and copper, sulfur is needed. That sulfur comes from Middle Eastern refineries and is exported through the Strait of Hormuz,the very region the United States attacked. The material base for waging war is being destroyed by the war itself. Using the Soufan Center's term, the war the United States started is weakening America's own industrial base,a paradox.

On February 27, one day before the start of operations, the U.S. Department of Defense requested from mining companies in the Defense Industrial Base Consortium (DIBC) project proposals to increase domestic supply of 13 critical minerals on which the country is almost entirely dependent on China. The United States does have reserves of rare earth elements and critical minerals. They are scattered across California, Wyoming, and Alaska. But the infrastructure for separation, refining, alloying, and magnet manufacturing does not exist. The country has ore but cannot process it. The Hormuz closure exposed this structural vulnerability along with price shock.

Analysis from the Oregon Group hits the core. If one seeks to find a single point of failure spanning the production of such a wide range of metals, it is sulfuric acid. When sulfuric acid wavers, nickel wavers too, copper wavers, cobalt wavers, uranium wavers, rare earths waver. And half the sulfur,the raw material for that sulfuric acid,was passing through one place: Hormuz.

The mines in the Strait of Hormuz did not merely block tankers. They halted the raw material for sulfuric acid that makes fertilizer. They halted the refining of nickel and cobalt that make batteries. They halted the supply of copper and gallium that go into missiles. A 21-mile waterway was dismantling the bonds of modern civilization at the elemental level.

AI expert attorney Kim Kyung-jin

Specializing in AI legal policy; former member of Congress; author of numerous works

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