Nat Gas Wars: Winners, Losers, and Fallout The war in Iran is the most important thing in the world today. It’s the equivalent of an economic nuclear war. And while everyone (including myself) watch oil prices tick higher minute by minute, there will be fallout. One of the most important is nitrogen fertilizer. Nitrogen fertilizer (primarily urea) is a critical part of modern agriculture. With sufficient nitrogen, grain production increases 50% to 100%. That’s far more than any other single nutrient application. The good news is that urea is plentiful, (normally) cheap, easy to transport, and apply. However, the limiting factor is what we use to make urea…and that’s natural gas. Natural gas is 90% of the cost of making nitrogen fertilizer. That means natural gas price spikes have a huge impact on the price of nitrogen fertilizer. The last time natural gas prices spiked, the price of urea exploded from $200 per metric ton in 2020 to $1,050 per metric ton in April 2022. That spike came from a natural gas shortage due to the Russian invasion of Ukraine. It shut down 70% of Europe’s urea production… As I wrote here, Iran targeted Qatar’s giant Ras Laffan natural gas complex. That massive industrial area includes the world’s largest urea production facility. It can produce six million metric tons per year (about 12% of the world’s supply). Saudi Arabia produces about 17.2 million metric tons per year. And Iran also produces about nine million metric tons per year. In total, those three states account for nearly half of the world’s annual urea production. And all three are offline right now. Urea prices are now up 25–35% since the start of the war. It will only get worse from here. Natural gas prices rose slightly in the U.S., up 14% since the end of February 2026. But they are ripping higher in Europe. Dutch natural gas prices soared 65% after the Strait of Hormuz closure hit QatarEnergy’s ability to ship natural gas. In 2022, companies like BASF and Yara took a beating. Both rely on natural gas to produce fertilizers and other products: As we can see, BASF fell over 50% and Yara fell 40% in that crisis. However, that isn’t the case today. The market thinks Yara is bullet proof in the current crisis: BASF isn’t quite as robust, but the stock hasn’t fallen much at all. That’s because in 2022, the three middle eastern companies kept producing, which kept the fertilizer price low. Today, the price of fertilizer is soaring, so it will offset some of the cost of natural gas. That said, natural gas prices can reach the point where Yara can’t produce urea at a profit. That happened in 2022. I expect it to happen again in 2026. At that point, Yara’s shares will plummet. At the same time, a big winner from 2022 reemerged with the current crisis. U.S. based nitrogen fertilizer maker CF Industries (NYSE: CF) soared 180% from August 2021 to early 2022: And investors piled in again in 2026: This trade has room to go higher, as the real damage to urea prices hasn’t settled in yet. However, as I suggested in the last essay, it may be better to simply buy natural gas ETFs: There are several simple ways to speculate on natural gas prices. The U.S. Natural Gas Fund (NYSE: UNG) tracks the price of natural gas through futures. For those who want a little juice in the trade, there’s the ProShares Ultra Bloomberg Natural Gas Fund (NYSE: BOIL). BOIL provides a 2x leveraged return on natural gas futures prices. Both speculations remain the best opportunity to play rising natural gas prices. And make no mistake, we will see higher gas prices this year. That means higher heating costs for many. And the shortage of nitrogen fertilizer will make food significantly more expensive, too. Comments:
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The Houthis in Yemen have announced a blockade of Saudi Arabian shipping through Red Sea ports, including at the Bab el-Mandeb strait. The group, described as Iran-backed, stated the measure would target the top oil exporter following recent exchanges of fire.
Reports indicate this could add to existing maritime disruptions in the Strait of Hormuz linked to US-Iran confrontations.
A Reuters poll of economists conducted July 7-16 shows that most Gulf Cooperation Council economies are now projected to contract more sharply in the current year than estimated three months earlier, with median forecasts indicating declines of 8.1% for Kuwait and Qatar, 5.
1% for Bahrain, and 0.5% for the UAE. Saudi Arabia and Oman remain the only GCC economies expected to expand. The poll links the revisions to reduced export volumes through the Strait of Hormuz, higher freight costs, and weaker investor sentiment, even as oil prices have risen.
Initial reports indicate that a limited number of vessels transited the waterway during the first full day after the United States implemented a naval blockade of Iran. These observations have not been independently verified.
The head of the UN’s nuclear agency yesterday signaled that Iranian nuclear enrichment sites would be visited by his inspectors, a key component in the interim deal between the US and Iran to reach an end to their war. The comment by International Atomic Energy Agency (IAEA) Director-General Rafael Grossi was the firmest yet from the agency, which is viewed as key in determining the status of Iran’s nuclear stockpile.
Since Israel launched a 12-day war on Iran last year, the IAEA has been blocked by Tehran from visiting enrichment sites where the Islamic republic is believed to store enough highly enriched uranium to potentially build as many as 10 nuclear weapons.
Photo: AP Iran has said that its program is peaceful, although it would be the only country in the world to have uranium enriched up to 60 percent purity without a weapons program. The US and Iran offered contradictory remarks on Tuesday about whether those sites would be inspected.
“I can understand political statements, they are part of the reality, but the fundamental thing I would like to remind you and draw your attention to is that there has been a memorandum of understanding, signed by both presidents,” Grossi told journalists at a news conference at the Fukushima Dai-ichi nuclear power plant.
The accord “explicitly states that the nuclear activities that are going to be carried out with the regards of the nuclear material facilities will be supervised by the IAEA — in all letters,” he said. “Obviously, to do that, we have to inspect,” Grossi added.
BOOST: By operating the same advanced systems as the US military, Taiwan would be better positioned to share and integrate intelligence with partners, an expert said The first batch of MQ-9B SkyGuardian drones has arrived in Taiwan, and is being assembled and tested by drone manufacturer General Atomics and the military ahead of flight trials as part of the air force’s acquisition to bolster its aerial surveillance capabilities, a source said yesterday.
The air force allocated a budget of NT$21.7 billion (US$687 million) from 2022 to 2029 to procure four MQ-9B uncrewed aerial vehicles (UAVs) manufactured by General Atomics along with associated equipment such as ground control stations. The US has agreed to deliver the four MQ-9Bs to Taiwan in two batches this year and next ‘BRAZEN’: The holiday did not stop China from activities that infringe on Taiwan’s maritime jurisdiction, but the CGA is ready to defend the nation, Kuan Bi-ling said Beijing is intensifying maritime pressure on Taiwan, but the nation will never yield, Ocean Affairs Council Deputy Minister Sung Chen-en (宋承恩) said.
The Coast Guard Administration (CGA) has adopted a “shadowing and monitoring” approach to avoid falling into a Chinese trap to escalate tensions and deepen the conflict, Sung said in an interview published yesterday in the Chinese-language Liberty Times (the Taipei Times’ sister newspaper).
China Coast Guard formations patrolling waters east of Taiwan, as well as official Chinese vessels entering areas around Itu Aba Island (Taiping Island, 太平島) and Pratas Islands (Dongsha Islands, 東沙群島) show Beijing’s attempts to significantly step up Taiwanese firms’ China investments have dwindled to less than 1 percent of their total foreign investments, putting China-based investments on track for a record low this year, Ministry of Economic Affairs data showed.
Taiwan’s investments abroad in the first five months of this year reached US$35.92 billion, Department of Investment Review data showed. Investments outside China totaled US$35.61 billion, up 133.94 percent year-on-year, while investments in China totaled US$310.
3 million, down 32.3 percent and about 0.86 percent of the total, data showed. Major overseas projects included Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) US$30 billion capital injection into an overseas subsidiary, VARYING OPINIONS: People with different political affiliations have different views on how bilateral ties with the US, Japan and China would affect Taiwan’s security Two-thirds of Taiwanese view closer US and Japan ties as beneficial to security, a survey by Taiwan’s top military think tank showed.
To gauge the Taiwanese public’s perceptions of how different external relationships affect security, the Institute for National Defense and Security Research commissioned a survey by National Chengchi University’s Election Study Center asking respondents whether closer relations with the US, Japan and China would strengthen or weaken Taiwan’s national security.