Conflicts in the Middle East Represent an Opportunity for the Green Transition

By Camila Dias de Sá

In March 2022, just weeks after the outbreak of the conflict between Russia and Ukraine, concerns were already being raised about risks to the global availability of fertilizers. The conflict threatened shipping in the Black Sea, which had become a war zone at the time. In addition, sanctions imposed by Western countries—and their potential implications for Russia’s ability to trade with external partners—further increased uncertainty. Brazil urgently diversified its imports, yet Russia, a major fertilizer exporter, remains an essential supplier.

Here we are, four years later, once again grappling with concerns of the same nature: the potential impact that an armed conflict may have on fertilizer availability and, consequently, on the production costs of Brazilian agriculture.

Approximately 30% of the world’s oil and 20% of its natural gas production originate in the Persian Gulf region—Iran, Saudi Arabia, Kuwait, Qatar, Bahrain, the United Arab Emirates, and Oman—and are primarily transported through the Strait of Hormuz to reach open seas before being distributed globally. Since the beginning of the conflict, maritime traffic through the strait has been severely affected due to attacks on vessels and interference with navigation systems, prompting operators to avoid the route. This disruption affects distribution and supply, thereby putting upward pressure on prices. Attacks on land are also causing damage to production and processing infrastructure.

For the first time since Russia’s invasion of Ukraine, the price of a barrel of oil has exceeded US$100. Alternative routes exist, but shifting trade flows is far from trivial.

Beyond the potential inflationary impact on various global supply chains dependent on these raw materials—such as fuels and nitrogen-based fertilizers—there is an additional concern in the case of fertilizers: a significant share of global consumption is supplied by production in the Middle East. The region accounts, for example, for around 40% of global urea exports, implying direct dependence on this logistical corridor. In 2025, the Middle East accounted for 16% of Brazil’s nitrogen fertilizer imports. When imports from other sensitive regions, such as Russia and Venezuela, are also considered, Brazil’s total dependence on nitrogen fertilizer imports reaches 32%.

China (24%), India (15%), Brazil (10%), and the United States (10%)—in that order—together account for nearly 60% of global NPK fertilizer consumption. However, Brazil is the country in the most vulnerable position, given its low domestic production. The growth rate of Brazilian demand, averaging 3.8% per year, exceeded the global rate of 0.8% between 2014 and 2023, the most recent period available from the International Fertilizer Association (IFA). Furthermore, demand is expected to increase significantly, driven by the conversion of degraded pastures into agricultural land, the expansion of integrated systems, and the growth of second-crop production in the country.

Brazil is the world’s largest importer of fertilizers, and this dependency—although widely discussed for years—continues to grow. In the early 2010s, reliance on imports was around 70%; roughly 15 years later, it has surpassed 85% of national consumption, according to recent data from ANDA (National Association for Fertilizer Diffusion).

In 2022, the Brazilian government launched the National Fertilizer Plan (PNF), more than a decade overdue, establishing a long-term vision for the sector. Its main goal is to reduce import dependency to approximately 50% of consumption by 2050. ProFert (Fertilizer Industry Development Program) is one of the tools designed to support the PNF’s targets, offering fiscal and financial incentives for new projects and the modernization of existing plants. The program is linked to one of the PNF’s main pillars: the modernization, reactivation, and expansion of industrial capacity. Another pillar supported by the program focuses on improving the business environment and attracting investment.

Among the key challenges to enhancing the competitiveness of domestic production are the high cost of natural gas, the need for infrastructure improvements to facilitate distribution between producing and consuming regions, and fragmented governance across multiple ministries that still lack sufficient coordination to drive necessary progress.

Another pillar of the PNF relates to research, development, and innovation, encompassing, among other areas, support for specialty fertilizers, bioinputs, and sustainable technologies.

Nitrous oxide (N₂O) emissions—a gas with a global warming potential 265 times greater than CO₂—are associated with the use of nitrogen fertilizers. Brazil is estimated to generate annual emissions between 35 and 40 MtCO₂e, representing around 6% of agricultural emissions, according to data from the Climate Observatory. More rational fertilizer use could lead to a significant redefinition of consumption patterns. Combined with more efficient management, the industrial production of green fertilizers offers substantial mitigation potential.

Green fertilizer production is based on green hydrogen (H₂), which is used to produce green ammonia and, subsequently, green urea—offering a solution to reduce carbon footprints while also providing a more secure supply source, reducing reliance on imports from geopolitically high-risk regions.

Green hydrogen is produced through water electrolysis powered by renewable energy sources (solar, wind, or hydro). Currently, scaling up a fertilizer industry based on green hydrogen is primarily constrained by the high cost of this input, which is six to eight times more expensive than fossil-based alternatives. Some countries have heavily subsidized green hydrogen production, which may pose a challenge to the development of a competitive domestic industry. This context calls for public-private partnerships, demand-inducing policies, and mechanisms such as carbon market implementation, as well as adequate infrastructure. At present, projects are only viable with long-term contracts and guaranteed offtake agreements that support financing.

The green fertilizer agenda, in addition to offering climate mitigation potential, represents an opportunity to reduce external dependence and leverage Brazil’s highly renewable energy matrix—positioning the country as a regional hub for production and innovation, and as a strategic supplier in the global landscape.

Camila Dias de Sá was a researcher at ESALQ/USP, FEA/USP, and Insper Agro Global, and is currently Program Manager at Instituto Equilíbrio.