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Oil disruptions are cascading into fertilizer markets, weakening agriculture and putting South Asia’s food security at risk. We’ve seen this pattern before.
By Santosh Nepal
May 12, 2026
Disrupted oil flows through the Strait of Hormuz may appear, at first glance, to be another episode of energy market instability. But the implications, especially for South Asia, run much deeper. Disruptions in oil supply are not only causing a surge in fuel prices; they are a clear warning of an impending food crisis driven by fertilizer shortages, rising production costs, and increasingly fragile agri-food systems. A similar pattern was evident during the 2007-2008 global crisis, when fertilizer prices nearly tripled, and global food prices surged by more than 50 percent.
Modern agri-food systems depend heavily on energy, not only for transport and irrigation but also for fertilizer production. Nitrogen fertilizers, in particular, rely on natural gas. When energy supplies tighten, production slows and prices increase. What begins as an energy shock can quickly move into the agricultural system.
South Asian countries in particular heavily depend on fertilizer and natural gas from the Persian Gulf. In 2024, India imported more than half of its total fertilizer from the Gulf.
The problem deepens as fertilizers move through supply chains. South Asia’s imported fertilizers travel long distances across borders. Higher fuel costs and logistical disruptions delay delivery and reduce availability even more.
These impacts are not evenly distributed. Higher-income countries often buffer such shocks through subsidies or stronger purchasing power. In contrast, lower-income, import-dependent countries face immediate constraints.
Across South Asia, the scale of dependency is massive. India uses roughly 60 million tonnes of fertilizer nutrients annually, while Pakistan and Bangladesh use about 10 million and 6 million tonnes, respectively. Countries like Nepal, which have very limited domestic production, illustrate another level of vulnerability.
With the South Asian countries relying heavily on imports, timely access to fertilizer has become the most pressing constraint in agriculture production. Agriculture is extremely time-sensitive and does not respond well to delays. Crops require nutrients at specific growth stages. If fertilizer arrives late, farmers cannot fully recover the lost productivity. This means that even modest disruptions in supply can have wide-ranging consequences on crop production.
Disruptions linked to current tensions are affecting up to one-third of the global fertilizer trade, creating supply shortages and higher costs. Even at the lower end, the implications are serious. Staple crops such as rice and wheat are highly sensitive to fertilizer application. Evidence shows that removing nitrogen can reduce wheat yields by more than half, while inadequate phosphorus can lower rice yields by around 30 percent. In general, reduced fertilizer application leads to significant yield declines globally. In already stressed food systems, such reductions can quickly shift conditions from stability to shortage.
Lower yields push prices upward, reducing food access for low-income households. In countries like Nepal, where a large share of household income is spent on food, even small price increases can have significant effects. Imports may offset some shortages, but during global disruptions they become more expensive and less reliable.
This pattern is not new. During the 2007-2008 global food crisis, rising oil prices sharply increased fertilizer costs. Within a short period, global fertilizer prices nearly tripled, and food prices followed. The U.N. Food and Agriculture Organization’s Food Price Index rose by about 57 percent between 2006 and mid-2008.
The impact varied by country. Bangladesh experienced much sharper increases, with rice prices rising by over 60 percent and in some cases exceeding 70-80 percent. In India, domestic cereal prices increased more moderately, often estimated at around 20-30 percent due to strong policy interventions such as export restrictions.
Overall, though, countries across Asia and Africa experienced substantial increases in staple food prices, and more than 100 million people were pushed into extreme poverty. The crisis demonstrated how quickly energy shocks can cascade into food insecurity.
The current situation shows similar warning signs. Energy, water, and food systems are tightly interconnected. Disruptions in one sector rapidly affect the others. Policy responses therefore need to move beyond treating energy shocks as isolated events. Stabilizing the fertilizer supply should be an immediate priority. This includes building strategic reserves, diversifying import sources, and strengthening regional cooperation in procurement and distribution.
Beyond immediate stabilization measures, South Asia also needs longer-term strategies to reduce structural vulnerability. These include improving fertilizer use efficiency, investing in alternative nutrient sources, and strengthening domestic supply systems where feasible. This can be operationalized by expanding domestic production capacity for key fertilizers such as urea, alongside upgrading storage and distribution infrastructure to reduce supply bottlenecks.
In parallel, strengthening procurement systems, buffer stock mechanisms and regional logistics coordination can help stabilize availability during external supply shocks. Without such measures, South Asia will remain exposed to external shocks that it cannot control.
The risks are already visible. If current disruptions continue, the next crisis in the region may not be defined by fuel shortages alone, but by declining food availability. The lesson is clear: energy shocks do not remain confined to energy systems. They move quickly across sectors, and when they reach food systems, the consequences are far more difficult to contain.
By Santosh Nepal
May 12, 2026
Disrupted oil flows through the Strait of Hormuz may appear, at first glance, to be another episode of energy market instability. But the implications, especially for South Asia, run much deeper. Disruptions in oil supply are not only causing a surge in fuel prices; they are a clear warning of an impending food crisis driven by fertilizer shortages, rising production costs, and increasingly fragile agri-food systems. A similar pattern was evident during the 2007-2008 global crisis, when fertilizer prices nearly tripled, and global food prices surged by more than 50 percent.
Modern agri-food systems depend heavily on energy, not only for transport and irrigation but also for fertilizer production. Nitrogen fertilizers, in particular, rely on natural gas. When energy supplies tighten, production slows and prices increase. What begins as an energy shock can quickly move into the agricultural system.
South Asian countries in particular heavily depend on fertilizer and natural gas from the Persian Gulf. In 2024, India imported more than half of its total fertilizer from the Gulf.
The problem deepens as fertilizers move through supply chains. South Asia’s imported fertilizers travel long distances across borders. Higher fuel costs and logistical disruptions delay delivery and reduce availability even more.
These impacts are not evenly distributed. Higher-income countries often buffer such shocks through subsidies or stronger purchasing power. In contrast, lower-income, import-dependent countries face immediate constraints.
Across South Asia, the scale of dependency is massive. India uses roughly 60 million tonnes of fertilizer nutrients annually, while Pakistan and Bangladesh use about 10 million and 6 million tonnes, respectively. Countries like Nepal, which have very limited domestic production, illustrate another level of vulnerability.
With the South Asian countries relying heavily on imports, timely access to fertilizer has become the most pressing constraint in agriculture production. Agriculture is extremely time-sensitive and does not respond well to delays. Crops require nutrients at specific growth stages. If fertilizer arrives late, farmers cannot fully recover the lost productivity. This means that even modest disruptions in supply can have wide-ranging consequences on crop production.
Disruptions linked to current tensions are affecting up to one-third of the global fertilizer trade, creating supply shortages and higher costs. Even at the lower end, the implications are serious. Staple crops such as rice and wheat are highly sensitive to fertilizer application. Evidence shows that removing nitrogen can reduce wheat yields by more than half, while inadequate phosphorus can lower rice yields by around 30 percent. In general, reduced fertilizer application leads to significant yield declines globally. In already stressed food systems, such reductions can quickly shift conditions from stability to shortage.
Lower yields push prices upward, reducing food access for low-income households. In countries like Nepal, where a large share of household income is spent on food, even small price increases can have significant effects. Imports may offset some shortages, but during global disruptions they become more expensive and less reliable.
This pattern is not new. During the 2007-2008 global food crisis, rising oil prices sharply increased fertilizer costs. Within a short period, global fertilizer prices nearly tripled, and food prices followed. The U.N. Food and Agriculture Organization’s Food Price Index rose by about 57 percent between 2006 and mid-2008.
The impact varied by country. Bangladesh experienced much sharper increases, with rice prices rising by over 60 percent and in some cases exceeding 70-80 percent. In India, domestic cereal prices increased more moderately, often estimated at around 20-30 percent due to strong policy interventions such as export restrictions.
Overall, though, countries across Asia and Africa experienced substantial increases in staple food prices, and more than 100 million people were pushed into extreme poverty. The crisis demonstrated how quickly energy shocks can cascade into food insecurity.
The current situation shows similar warning signs. Energy, water, and food systems are tightly interconnected. Disruptions in one sector rapidly affect the others. Policy responses therefore need to move beyond treating energy shocks as isolated events. Stabilizing the fertilizer supply should be an immediate priority. This includes building strategic reserves, diversifying import sources, and strengthening regional cooperation in procurement and distribution.
Beyond immediate stabilization measures, South Asia also needs longer-term strategies to reduce structural vulnerability. These include improving fertilizer use efficiency, investing in alternative nutrient sources, and strengthening domestic supply systems where feasible. This can be operationalized by expanding domestic production capacity for key fertilizers such as urea, alongside upgrading storage and distribution infrastructure to reduce supply bottlenecks.
In parallel, strengthening procurement systems, buffer stock mechanisms and regional logistics coordination can help stabilize availability during external supply shocks. Without such measures, South Asia will remain exposed to external shocks that it cannot control.
The risks are already visible. If current disruptions continue, the next crisis in the region may not be defined by fuel shortages alone, but by declining food availability. The lesson is clear: energy shocks do not remain confined to energy systems. They move quickly across sectors, and when they reach food systems, the consequences are far more difficult to contain.
