In what is a fast moving environment, the interim agreement originally struck between the United States and Iran resulting in the reopening of the Strait of Hormuz was thought unlikely to lead to a short-term recovery in key fertiliser shipments. Many shipowners are reluctant to resume regular operations without greater certainty regarding security conditions. In this, they have been proved somewhat correct following random attacks on cargo vessels launched by Iran in early July that were roundly condemned by US president Donald Trump.
The Strait of Hormuz was all but closed in late February following US attacks on Iran. This resulted in a large number of merchant vessels being effectively unable to leave the Persian Gulf, a situation that had gradually begun to ease following the cease fire agreed by both countries.
Some of the largest global fertiliser plants are to be found in this area and around a third of worldwide urea trade has to pass through the Strait of Hormuz to reach export markets. Since February, most of these exports have stopped, with large consignment stranded on board vessels that have not been able to leave.
A recent report compiled by Bloomberg and Kpler suggests that more than 40 bulk carriers conveying fertiliser initially became trapped in the Gulf, with weekly exports 90% below pre-crisis levels. Kpler calculates that fertiliser consignments dropped from around 600,000 tonnes per week at the end of February to only 60,000 tonnes by the start of June.
However, fertiliser shipments have not been given priority as the situation eased, since tankers and LNG carriers have been placed at the front of the queue.
It has been suggested that those vessels stranded in the Persian Gulf region were carrying a combined one million tonnes of nitrogen fertilisers, of which around 40% was en route to India.