Protests continue in Iran, although recent government efforts to suppress the demonstrations do appear to have reduced the overall scale and frequency of unrest in some areas. A human rights group reports that it has verified the deaths of 2,403 protestors thus far, along with 147 individuals affiliated with the government. The group also reports 18,137 arrests, noting that some of those detained are expected to face execution. Independent verification inside Iran remains difficult due to restrictions on foreign media, internet disruptions, and limits on access for international observers, meaning the reported figures are widely viewed as conservative estimates.
President Trump threatened to hit Iran directly if it uses excessive lethal force against protestors. It is widely believed that President Trump has decided to take action, although it remains unclear what that response will look like, ranging from increased economic pressure to more direct military or cyber measures. The administration has not publicly outlined a specific timeline or strategy.
Iran has reportedly cut off direct diplomatic communications with the United States, but reports indicate it has communicated through neighboring countries that it would retaliate against U.S. military positions in those nations if the United States carries out a strike. Regional analysts say that warning raises concerns for U.S. forces stationed across Iraq, Syria, and parts of the Gulf, increasing the risk of a broader regional escalation.
Fertilizer markets are already reacting to the uncertainty. StoneX fertilizer analyst Mike Castle said the Iran situation is having an outsized impact on nitrogen markets, particularly urea. “Yeah, unfortunately, you know, we finally had good news and fertilizer there for a while and it feels like it just never gets to last,” Castle said. “We did get a decent correction, you know, with the Iran situation going on. It’s the Urea market specifically that sees the biggest impact here and that, you know, broader nitrogen sector in general.”
Castle said Iran’s role in global fertilizer trade is often underestimated. “But what a lot of people don’t realize, Iran is the world’s number three Urea exporter. They’re massive and they also obviously where they sit with the choke point there at the Strait of Hormuz,” he said. “It’s not just the oil guys that care about that, it’s fertilizer too.”
He noted that roughly half of global urea exports originate in the Middle East and North Africa, much of it moving through the Strait of Hormuz. “So whenever we see these issues, obviously we saw it back in June with the conflict between the U.S and Iran and a lot of the issues that they’re actually dealing with right now can tie back to that,” Castle said.
According to Castle, Iran’s fertilizer production has already been curtailed by infrastructure damage and gas supply constraints. “So some of those strikes took out some of their gas infrastructure that’s just now coming back online,” he said. “Basically focusing on heating homes instead of using that gas to produce fertilizer, which again makes sense, but it does reduce nearby supply and you’ve seen that pretty significantly in the last couple of weeks.”
Castle said current production levels remain sharply limited. “Right now it sounds like they only have one plant online,” he said. “We’ve been curtailed here for a few weeks because of gas supply issues.” He added that urea values have responded quickly. “We’re seeing all the Urea values jump pretty sharply here this week. You know, obviously Iran specifically very weak production right now.”
Looking ahead, Castle said supply disruptions could persist well into the spring. “There’s a lot of talk that they won’t have a lot of exportable supply available until like March,” he said. “Their production could stay curtailed and that’s assuming the government isn’t overthrown, right?”
He warned that any broader escalation would amplify the risk. “Same side with ammonia, they’re a huge ammonia exporter as well. Pretty much anything nitrogen does have an impact from this,” Castle said. “But if you were to see U.S intervention, if you were to see a broader regional conflict, obviously the conversation gets even wider. That’s even more supply and jeopardy here.”
Castle said the timing of the unrest has compounded market reaction, coinciding with a major Indian urea tender. “So a lot of those tons are coming from the Arab Gulf and you know, a lot of folks who buy their Iranian stuff are now having to shift to other origins,” he said, noting Brazil and Turkey as major buyers. India had aimed to purchase 1.5 million tons but secured less than one million, raising questions about when it may return to the market.
“With less supply available on the front end, folks are gonna have to start, you know, competing over these tons,” Castle said. He added that the U.S. spring application season is approaching quickly. “Here we sit in mid-January, we’re only a few months out from the U.S spring season, so we’re gonna have to be competing for some of these tons as well.”
Castle said fertilizer fundamentals had been pointing toward lower prices before geopolitical risks reemerged. “Unfortunately, again, we had, you know, seen fundamentals actually look supportive to move prices down,” he said. “But again now we’re swinging back the other direction.” He added that values are rising globally and warned the situation remains highly fluid. “It obviously can change very quickly, but unfortunately it does not look like output from there is, you know, gonna be improving anytime soon with all the unrest that’s ongoing there.”
