Gulf fertilisers face a difficult year as shipping disruptions continue to affect regional exports. However, market conditions could improve as global supply growth slows. Gulf fertilisers could benefit from stronger demand and tighter supplies over the coming years. Meanwhile, companies are adjusting operations as transport costs remain elevated.
The regional industry includes major producers across Saudi Arabia, Qatar, Oman, and the UAE. Several companies focus mainly on urea production using natural gas as a feedstock. Saudi producers also maintain significant positions in phosphate-based fertilisers. Therefore, the Gulf industry serves several important segments of the global agricultural market.
Disruptions around the Strait of Hormuz have created major challenges for exporters. Shipping costs have increased sharply compared with levels before the regional conflict. Some producers can move products through Saudi Arabia’s Red Sea ports instead. However, road transportation can make those routes too expensive for certain shipments.
Urea production costs generally range between $150 and $200 per tonne. Meanwhile, average urea prices reached about $420 per tonne during the third quarter. Higher transportation expenses therefore reduce the margins available to producers. As a result, companies have become more selective when accepting export orders.
Some producers may instead hold additional inventories while transportation conditions remain difficult. This strategy could allow companies to wait for improved shipping conditions. Lower freight costs could then offset any decline in fertiliser prices. However, producers must balance inventory costs against future market opportunities.
Industry expectations point toward tighter urea markets over the next several years. Additional demand could exceed new production capacity through the end of the decade. Forecasts indicate a potential supply gap of about 2.3 million tonnes. Consequently, prices could remain above their recent historical averages.
Urea prices have generally traded around $300 to $350 per tonne outside major disruptions. Analysts expect the longer-term baseline to move closer to $400 per tonne. Stronger consumption could support that shift as agricultural demand increases. At the same time, slower capacity growth could limit additional supply.
Company results have varied considerably during the first half of 2026. Some producers benefited from higher selling prices despite lower shipment volumes. Others faced weaker production and increased transportation expenses. Therefore, regional companies have experienced different financial outcomes during the challenging market.
Fertiglobe recorded a significant increase in first-half profit during the period. Its net profit reached $312 million, more than three times the previous figure. Higher urea prices supported earnings despite lower sales volumes. Lower tax and finance payments also contributed to the stronger result.
Maaden’s phosphate business experienced a different performance during the same period. Its first-half net profit declined by 55 percent to $271 million. DAP production also dropped sharply during the second quarter. However, stronger DAP pricing helped reduce the impact of higher shipping expenses.
Sabic Agri-Nutrients also reported weaker earnings during the first half. Its net profit declined by 21 percent to $428 million. Meanwhile, Qatar Fertiliser Company reported a $13 million half-year loss. Its production fell significantly, although higher selling prices provided some support.
Despite the current challenges, analysts see opportunities across the fertiliser sector. They point to limited oversupply compared with other chemical industries. Furthermore, agricultural demand could strengthen as crop prices improve. Higher farm revenues may encourage growers to increase fertiliser purchases.
Fertiliser prices also influence farmers’ production decisions because the products represent a major farm expense. Higher costs have encouraged some farmers to reduce their fertiliser use. That reduction can affect crop yields and tighten agricultural supply. Consequently, stronger crop prices could eventually support renewed fertiliser demand.
Regional fertiliser companies also maintain relatively strong financial positions. Strong balance sheets could help them manage temporary disruptions and market volatility. Moreover, established production facilities provide a base for future growth. These factors could support the sector as global demand develops.
The outlook for Gulf fertilisers therefore depends on both logistics and global supply trends. A normalization in regional shipping could significantly reduce transportation expenses. At the same time, tighter global supply could support higher product prices. Together, these factors could improve profitability across the regional industry.
Investors may therefore continue watching fertiliser companies beyond the immediate market disruption. Short-term results could remain uneven while shipping conditions stay uncertain. However, slower capacity expansion could create better conditions over the longer term. Demand growth could then provide additional support for producers across the Gulf.
Gulf fertilisers could enter a stronger market phase if regional logistics improve. Producers would benefit from lower transportation costs and healthier export margins. Meanwhile, global agricultural demand could continue supporting consumption. The combination could create a more favorable environment for the sector from 2027 onward.
