INTRODUCTION Contributed by: Domicio dos Santos Neto and Frederico Favacho, Santos Neto Advogados
Brent crude surged from approximately USD70 per barrel to over USD110 at the peak, and the closure of the waterway – through which approximately 30% of globally traded fertilisers normally transit, alongside 20% of LNG and 27% of internationally traded oil – sent fertiliser prices sharply higher across every major agricultural producing region. FOB granular urea, a bellwether for nitrogen fertilisers, rose from USD400– 490 per metric ton before the conflict to approximately USD700 per metric ton within weeks, and prices for diammonium phosphate (DAP) surged well above their February 2026 benchmark of USD622 per short ton. The shock has been global in scope precisely because the Gulf region is so structurally dominant in fertilis- er production: countries exposed to the disruption account for nearly 49% of global urea exports and approximately 30% of global ammonia exports. The consequences are most acute in countries that are both major agricultural producers and heavily import- dependent for fertilisers. • Brazil is the world’s largest fertiliser user, at approximately 49 million metric tons in 2025, 85% of which is imported. The country saw urea import volumes fall by 33% in the initial weeks of the crisis, and faces the additional challenge that the conflict began at the precise moment when producers must purchase inputs for the 2026–27 planting cycle. • India is one of the world’s largest rice and wheat producers, and faces exposure through import dependence and also through reduced domestic manufacturing capacity linked to disrupted LNG feedstocks. • Sub-Saharan Africa, where over 90% of fertiliser is imported, faces the most acute vulnerability. • In the United States, early surveys by the Ameri- can Farm Bureau found that approximately 70% of farmers were unable to afford all the fertiliser they needed for the 2026 crop, and a coalition of 54 agricultural groups urged the administration to provide emergency market relief. Critically, the 2026 episode has emerged in an envi- ronment of structurally compressed margins across producing regions: unlike the 2022 fertiliser shock, which coincided with a sharp rise in commodity prices
that partially offset the cost increase, fertiliser price increases in 2026 have not been matched by com- mensurate commodity price gains, squeezing profita- bility across the global soybean, corn and wheat belts simultaneously. If the Strait of Hormuz remains dis- rupted through the fall of 2026, modelling by research- ers at North Dakota State University suggests that global urea availability could tighten materially, with agricultural producing nations competing for reduced supply at elevated prices into the key forward-booking windows for the 2026–27 season. The conflict has also confirmed a structural vulnerabil- ity that pre-existed it: the global fertiliser market lacks the kind of co-ordinated strategic reserves that exist for oil, making supply disruptions harder to manage and price spikes harder to moderate. New geopolitical alignments: trade agreements, tariff threats and market access challenges Beyond the immediate input cost shock from the Strait of Hormuz crisis, global agribusiness is navigating a new and more complex geopolitical architecture of trade relationships – one that combines unprecedented market-opening through bilateral and plurilateral agree- ments with the simultaneous erection of new regula- tory, tariff and sanitary barriers by the same trading partners. The defining feature of this landscape is not that any single trade arrangement is exceptional, but that market access gains and market access losses are arriving simultaneously, creating a net outcome that is ambiguous and jurisdiction-specific. The pattern is visible across the major agricultural trade relationships of the world. The US–Brazil bilat- eral relationship illustrates the tension between trade and geopolitics acutely. On 15 July 2025, at the direc- tion of President Trump, the US Trade Representative (USTR) initiated an investigation under Section 301 of the Trade Act of 1974 into a broad range of Brazilian trade practices, covering: • digital trade and electronic payment services;
• preferential tariff arrangements; • anti-corruption enforcement; • intellectual property protection; • ethanol market access; and • illegal deforestation.
7 A GRICULTURA L LAW 20 26
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