Trump’s Decision To Blockade Iran Ups The Ante On Prices

President Donald Trump’s decision to blockade Iranian ports is spiking oil and gasoline prices – but it also threatens to intensify shortages of key commodities such as helium and fertilizer.

Iran’s chokehold on ship passage through the Strait of Hormuz was already crimping global supplies – about a third of global fertilizer and helium supplies transit through the strait annually – but the continuing stalemate between the U.S. and Iran comes at arguably the worst time for agriculture, threatening to drive up food prices possibly for months to come even in the best case scenario.

With gas prices hovering at $4.13 per gallon, according to AAA, adding in persistently high grocery costs is a one-two punch for Republicans ahead of a midterm election that was already expected to be tough.

Even if the strait reopens in the near future, fertilizer inputs such as urea, ammonia, phosphates and sulfur would take about a month to reach the United States, according to Veronica Nigh, senior economist at The Fertilizer Institute, the industry’s trade association. Other economists and agriculture industry insiders say the supply chain backlog could take years to fully recover.

White House officials did not immediately provide comment.

The Trump administration has insisted that the majority of farmers have already purchased or secured their fertilizer needs for this year.

“The good news is that about 80 percent of our farmers actually last fall locked in their fertilizer, so as we’re moving into planting season, it’s only about 20 to 25 percent of our farmers that didn’t lock that in,” Agriculture Secretary Brooke Rollins told reporters at the White House last week.

In Texas, many farmers are feeling the pressure as the planting season is well underway, said Texas Agriculture Commissioner Sid Miller, a close Trump ally.

“We’ve got to get crops in the ground now,” he said. “We can't wait until that strait gets opened and fertilizer and diesel prices come down. Mother Nature doesn't wait on you, it's time to plant.”

Fertilizer stress now hitting

The lack of fertilizer inputs comes just as most U.S. farmers are preparing for the spring planting season.

An early projected plantings report showed an overall decrease in farmers’ acreage plans this year, and those farmers who choose to apply less fertilizer than normal will likely be stuck with a smaller yield at the end of the crop year. And it won’t just harm crops – nitrogen to fertilize corn, the primary feed stock for beef, poultry and dairy cows, meaning meat and dairy prices could climb further.

“That means less food produced, which means higher food prices for everybody,” Nigh said. “The ripple effects are substantial.”

But two farm industry lobbyists, who were granted anonymity to candidly critique the administration’s messaging, say that discounts the roughly one fifth of farmers who are likely to be younger and just starting out, who don’t have the deep pockets to pay for fertilizer that far in advance. And even those who can, the two people said, are still concerned that they won’t be able to secure all the supply they typically expect to use this time of year.

Industry groups like the National Corn Growers Association have sounded the alarm about farmers switching to crops like soybeans that require less fertilizer than corn. That could have longer-term ramifications for the myriad products in grocery stores that include corn syrup or other byproducts.

A poll conducted by Farm Journal and analyzed by NCGA of 1,000 corn farmers showed that their anxiety about affording or obtaining fertilizer is even higher for next year. More than 30 percent of farmers said they were more concerned about the price and availability of fertilizer this year, and nearly 60 percent said they were more concerned about 2027.

“Added market stress due to the Strait of Hormuz closure has only intensified an already difficult situation, particularly as we look towards 2027,” Jed Bower, Ohio farmer and NCGA president, said in a statement.

Miller, the Texas state agriculture commissioner, said “it’s not all doom and gloom” for farmers. In Texas, some farmers are already shifting away from crops such as cotton and corn that heavily rely upon fertilizers, to soybeans, watermelon and cantaloupe.

Medical tests and semiconductors also impacted

Beyond crops, helium supplies are also hurt — and that means impacts to everything from semiconductors to MRI tests and even rocket launches. That’s because helium is used to cool a wide range of superheated things such as electronic chips, and MRI machines’ superconducting magnets.

Spot prices for helium, which is derived from natural gas, have more than doubled since the war began. The shortages are only just now beginning to hit some of the more vulnerable regions now in Asia.

The blockade will ensure that the global helium “shortage lasts longer and becomes more difficult to manage through normal logistics,” said Aleksandr Romanenko, founder & CEO of the market research firm IndexBox.

“Allocation tightens, spot volumes become harder to find, lead times stretch, and refill economics worsen,” he said. “In helium, that is what a real shortage looks like before it shows up as visible shutdowns.”

And while the U.S. produces the majority, or 44 percent of the world’s helium, according to the Energy Policy Research Foundation, Qatar is the second largest at 35 percent. Already, some helium-producing facilities in Qatar have been damaged in the war, and could take years to come back online.

Similar to crude oil, the world has largely been running on existing volumes of helium that were in transit or storage since the war started, said Anish Kapadia, CEO of AKAP Energy. That means the real price increase, and potential shortages, have not begun to hit. For now, the world has not experienced the real pain of a challenged helium market, but that is coming very soon, he said.

“Even if the straits were to open up as of tomorrow, it's going to take a couple of months for things to get closer back to normal,” he said. “You're probably not seeing it as much at the moment, but it's something that is going to creep up and bite people.”

Medical research facilities are already feeling the loss of helium, said Jeffrey Hoch, director of the Gregory P. Mullen NMR Structural Biology Facility at the University of Connecticut. Hoch said his lab — which uses equipment that relies on helium-cooled supermagnets to conduct invaluable research on new drugs, prosthetic limbs and cancer – has already had contracts cancelled with a Qatar-based supplier. Hoch, who spoke from the sidelines of a medical conference in California where the loss of helium supply was being addressed, has replaced some of the lost helium volumes from a Texas-based supplier, but at twice the cost.

A new piece of essential equipment that just arrived from Germany is now sitting idle because of the helium market pressure, he said.

“The cost of cooling it down and getting this instrument into service in support of our research has basically doubled in the last few weeks,” Hoch said.