The escalating tensions around the Strait of Hormuz are spreading their impact from energy markets to the broader supply chains of key commodities.

Beyond crude oil and natural gas, the supply of critical industrial raw materials such as fertilizer, sulfur, aluminum, and helium is facing disruptions, with effects rippling from global agriculture to sectors including semiconductors, automotive, and aerospace.

The Middle East is not only a vital global energy export hub but also a core supplier of strategic raw materials like fertilizer, sulfur, aluminum, and helium, with the Strait of Hormuz serving as a crucial passage for these goods into international markets.

As regional tensions have intensified once more, shipping companies are continuously increasing their risk mitigation efforts, with some cargo flows already experiencing significant impacts.

Market prices are already reflecting supply anxieties. In the week ending July 10, urea prices in New Orleans, a key global benchmark, rose 6.2%, marking their largest weekly gain in over three months.

Industry sources estimate that spot helium prices have at least doubled since March.

While aluminum billet processing fees retreated somewhat after a June ceasefire, they remain notably higher than levels seen before the conflict erupted.

Fertilizer Supply Under Strain, Raising Risks for Food Costs

The Persian Gulf region hosts major global fertilizer producers, including Qatar Fertiliser Company, Fertiglobe Plc, and Saudi Basic Industries Corporation, whose products are heavily reliant on the Strait of Hormuz for export to international markets.

The current escalation is impacting the fertilizer supply chain from both the supply and demand sides.

On one hand, the energy infrastructure essential for producing ammonia and urea faces potential risks.

On the other, shipping disruptions for exports are weakening global supply capacity.

Unlike during previous conflicts when some vessels remained at sea as floating storage, more shipping firms are now opting for rerouting or suspending services altogether, pushing supply risks further back toward the production end.

As the Southern Hemisphere enters its agricultural preparation season, purchasing pressure from major importing nations is mounting.

During the last regional conflict, India, the world's largest urea importer, purchased urea at nearly double the pre-conflict price.

Analysts suggest that sustained constraints on fertilizer supply could further limit crop yields and, against a backdrop of frequent extreme weather, drive up global food costs.

Sulfur Supply Tightens, Sparking Competition Between Agriculture and Mining

The Middle East is also a significant global hub for sulfur supply.

Sulfur is a key raw material for phosphate fertilizer production, and prior supply tightness had already forced some fertilizer companies in Brazil, the United States, and Morocco to cut output.

Concurrently, sulfur and its derivative, sulfuric acid, are crucial inputs for smelting metals like copper and nickel.

Rising prices are prompting competition for limited supplies between agricultural and mining industries, intensifying cost pressures downstream.

Maria Mosquera, a sulfur products editor, noted that recent shipments from the Middle East arriving in India provided some temporary relief, but since last week, cargo traffic through the Strait of Hormuz has stalled again, reigniting supply concerns.

Aluminum Supply Faces Constraints, Particularly for Specialized Products

The Middle East accounts for nearly one-tenth of global primary aluminum production and holds even greater importance in the market for high-value-added, specialized aluminum products like billets, which are widely used in automotive, construction, and aerospace industries.

While increased production in other regions and alternative logistics have somewhat alleviated pressure on the supply of standard aluminum products, the market for specialized aluminum materials remains tight.

Industry insiders anticipate that even if producers can reroute exports through other ports, increased shipping distances and reduced logistical efficiency will continue to elevate costs, keeping billet processing fees at elevated levels.

Helium Shortage Impacts AI Chip Manufacturing

The Ras Laffan Industrial City in Qatar is not only home to the world's largest liquefied natural gas export facility but, prior to the escalation, supplied approximately one-third of the global helium market.

While helium has wide applications in medical devices, automotive safety systems, and other fields, its strategic value is most pronounced in semiconductor manufacturing.

Due to its excellent cooling and silicon wafer protection properties, helium is a critical industrial gas for advanced chip production, with no mature alternatives currently available.

As supplies tighten, chipmakers are accelerating efforts to find alternative sources and are drawing down inventories to mitigate short-term impacts.

With no public trading market for helium, price transparency is limited.

A helium market consultant with over 40 years of experience, Phil Kornbluth, stated that spot helium prices have at least doubled since March, and the market is now experiencing a "noticeable shortage."