India to purchase fertilizer at nearly double pre-war price

India, the world’s top importer of urea, has agreed to buy the nitrogen-based fertilizer at sharply higher prices than in a previous tender as the Middle East conflict disrupts supplies and pushes global benchmarks higher.

Indian Potash Ltd., which imports the crop nutrient for the government, will secure 1.5 million tons for delivery on the west coast at $935 per ton, while another 1 million tons will be delivered on the east coast at $959 per ton, according to people familiar with the matter.

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The offers are almost 90% higher than what India agreed to pay in a tender before the start of the conflict, said the people, who asked not to be named due to the commercial sensitivity of the information. Urea from the Middle East, a major supplier to the South Asian nation, was quoted at $490 a ton before the war began, according to Green Markets data.

A fertilizer ministry spokesperson didn’t immediately respond to an email seeking comment.

More than two dozen firms submitted offers last week, quoting rates between $935 and $1,136 a ton. This would be India’s first purchase since the US-Israel strikes on Iran and comes at a crucial period ahead of sowing for monsoon crops such as rice, corn and soybeans. The 2.5 million-ton tender has not formally been awarded, but is expected to be confirmed by Thursday, the people said.

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The South Asian nation’s urea production relies heavily on natural gas, much of it from the Middle East and used to make ammonia, a key feedstock for the fertilizer. Supply disruptions following the effective closure of the Strait of Hormuz forced some regional producers to idle plants last month. Indian authorities are now in talks with major producers and exporters to secure direct shipments of nitrogen-based and phosphatic fertilizers.

Global urea prices have surged since the war began, with nearly 45% of global supply moving through the Persian Gulf, according to Bloomberg Intelligence. Any prolonged disruptions could push prices even higher.