Three things the oil price isn’t telling you

On 9 March, Zippy Duvall – president of the American Farm Bureau Federation, the man who speaks for nearly six million American farming families – wrote a letter to Donald Trump about fertiliser.

Specifically, urea. The nitrogen fertiliser that American farmers order in March, spread in April and May, and absolutely need in the ground before spring planting closes.

His message was blunt: urea prices were up 25% in ten days, factories in India and Bangladesh had shut down, and nearly half of global urea exports were now stuck behind the same blockade that had stopped the oil tankers.

“Not only is this a threat to our food security,” Duvall wrote, “it is a threat to our national security.” His request to the President: deploy the US Navy to escort fertiliser ships through the Strait of Hormuz.

Eleven days into a war that started as an oil shock, the most powerful agricultural lobby in America was asking for a naval escort for bags of plant food.

That’s how far the disruption had already travelled – through a supply chain that few in energy markets were watching – from a Qatari gas well to a liquefaction terminal to a 33-kilometre strait to a fertiliser factory to a Missouri farmer who found out from his local retailer that urea had gone up $140 per ton in a fortnight.

Every trading desk in the world had their eyes on Brent. Almost nobody was watching that chain.

Of course, the oil price story is well covered. Brent above $100, tanker traffic collapsed, war risk premiums at 5% of hull value – you know all of this, and so does every analyst at every bank. That market is not inefficient.

What the oil price isn’t capturing is what the disruption has already done to three other parts of the global economy – a fertiliser shock feeding quietly into food prices, a chemical market re-rating shifting industrial margins and a helium supply disruption that connects the Strait, almost invisibly, to the AI infrastructure trade.

Each is at a different stage of being understood. All three are worth your attention.

The first thing: fertiliser, food and the inflation problem nobody has put in their model

The fertiliser story has been reported. What hasn’t been worked through is where it leads.

Start with the numbers. Countries in the Hormuz disruption zone account for nearly 49% of global urea exports and 30% of global ammonia exports.

Urea at the New Orleans barge – the US benchmark for agricultural input costs – was trading at $462 per ton on 27 February. By 3 March, three trading days later, it had reached $590. By 16 March it was $601 and still climbing.

Farmers who didn’t pre-order are being told by distributors they may simply not get supply before planting begins. Some are already switching acres from corn and maize – which needs heavy nitrogen – to soybeans, which don’t.

While that decision sounds mundane, it isn’t. Corn is the feedstock for US ethanol, a major input for global livestock feed, and the crop whose planting intentions move agricultural commodity markets for the rest of the year.

When American farmers start pulling corn acres in March, the effects ripple through to grain prices by autumn and food prices before the year is out.

The World Bank has a figure for this: every 1% rise in fertiliser prices pushes global food prices up by roughly 0.45%. Run that against a 25-30% urea spike that embeds itself into a full growing season and you have a meaningful food inflation input arriving in CPI prints around Q3.

As far as public communications suggest, no major central bank is treating this as a base case outcome of Hormuz. They are all watching the direct energy price channel – oil up, petrol prices up, consumers squeezed. That channel is real and well understood.

The food channel is a little different. It’s slower, less visible and harder to fight with interest rates because it’s a supply disruption rather than runaway demand. The Fed raising rates doesn’t make urea cheaper or persuade Iranian forces to let fertiliser ships through the Strait. By the time the food inflation shows up in the data, the agricultural decisions causing it will have already been made.

For UK readers, there's a particular irony here. Britain can't grow enough food to feed itself and produces almost no fertiliser domestically. The food price consequences of what is happening at Hormuz right now will show up in British supermarkets before they show up in most economic forecasts.

The most direct beneficiaries of the fertiliser price spike are the US and Canadian producers now filling the gap that Gulf exporters have left. CF Industries and Mosaic – both NYSE-listed – have already moved sharply: CF posted its largest two-day rally in company history in mid-March.

But the structural case, and the companies best placed to capture durable market share rather than just a temporary price bump, are in the Watchlist.

The second thing: the chemicals re-rating, and why investors are only seeing half the picture

Some of this is being picked up. The full picture isn’t – and that’s where the value is.

84% of Middle Eastern polyethylene capacity depends on Hormuz to get its product to market. Asian chemical plants are losing naphtha feedstock. China, which imports a big chunk of its methanol from Iran to feed its plastics production base, is facing cuts that were unavoidable the moment Iranian production stopped.

European chemicals producers who walked into March expecting modest price increases are now offering triple-digit per-tonne increases just to hold onto their customers. And sitting right in the middle of all this, with cheap Permian and Marcellus gas feedstock, are the US producers – Dow, LyondellBasell, Celanese, all NYSE-listed – who have just watched their most competitive global rivals go dark.

The market has noticed. Citi upgraded Dow and LyondellBasell in early March, lifting EBITDA estimates by 22% and 32%. Jefferies puts the maths at roughly $250 million of extra EBITDA for LyondellBasell and $500 million for Dow for every $5 per barrel move in oil. Celanese was up nearly 15% in a single session on 13 March. The margin trade is real.

What some investors are missing is the customer layer underneath the margin. A South Korean plastics manufacturer that spends March rebuilding its supply chain around US ethylene doesn’t just flip back to Gulf supply when the Strait reopens. The relationships have moved, the contracts are signed, the logistics have been rebuilt around a different supplier.

Gulf producers coming back online in Q3 will find the market less welcoming than they left it. That’s the difference between a windfall and a structural re-rating – and it’s a meaningful valuation gap.

Dow, LyondellBasell and Celanese have all moved. The Watchlist examines which of the three has the strongest case for a re-rating that survives the reopening of the Strait – and which is primarily a price-spike trade that reverses when Gulf supply returns.

The third thing: helium, semiconductors and the risk hiding inside the AI trade

Stay with us here, because this one goes somewhere unexpected.

Qatar’s Ras Laffan is the world’s largest LNG export hub. It is also, less obviously, the source of roughly a third of the world’s helium supply – extracted as a byproduct when natural gas is processed and liquefied. When QatarEnergy halted production on 2 March after Iranian drone strikes, the LNG stopped. So did the helium. Spot prices have roughly doubled since.

Why does that matter? Because helium is not substitutable in semiconductor manufacturing. It is used as a coolant and purge gas when silicon wafers are fabricated – the process that produces every advanced memory chip in the world – and there is no viable alternative at scale.

The semiconductor industry quietly overtook MRI machines as the world’s largest helium consumer in October 2025, with demand growing 14.6% last year, almost entirely because of AI. Alphabet, Amazon, Microsoft and Meta are on track to spend roughly $650 billion on AI infrastructure in 2026. All of that requires chips. All of those chips require helium to make.

South Korea – home to Samsung and SK Hynix, which between them produce a huge share of the world’s advanced memory – sourced nearly two-thirds of its helium from Qatar last year.

The semiconductor fabrication plants – fabs, in industry shorthand – are not in trouble today. SK Hynix says it has diversified supply and enough inventory. TSMC isn’t expecting an immediate impact. Those statements are credible – the helium market was in oversupply heading into this crisis and the industry has buffers. Nobody is sounding a five-alarm fire.

But Phil Kornbluth – the leading independent helium consultant, the person chipmakers call when supply gets tight – said on 4 March that it is becoming hard to imagine avoiding a minimum two-to-three month production shutdown at Ras Laffan, and a four-to-six month period before supply chains return to normal.

And even if Ras Laffan restarted tomorrow, the specialised cryogenic containers that ship liquid helium around the world are sitting on vessels that can’t get through the Strait. Repositioning that logistics chain takes weeks after production resumes.

This isn’t an immediate crisis. It’s a slow tightening – and slow tightenings are the ones that don’t get noticed until they’re already biting.

The signal to watch isn’t helium spot prices, which are thinly traded and hard to access. It’s supply allocation announcements from Linde, Air Products and Air Liquide – the industrial gas majors who sit between Qatari production and the fabs, and who are all accessible to European investors through major exchanges – and any statement from Samsung, which, as of the time of writing, has said nothing publicly about its helium position despite being among the most exposed chipmakers on the planet. That silence is worth noting.

If this extends long enough for fab-level constraints to emerge, the repricing doesn’t happen in energy stocks. It happens in the AI trade – the most crowded position in global equities – which is built on the assumption that the supply chains underpinning chip production keep running smoothly.

Hormuz has introduced a risk to that assumption that barely registers in current valuations, and that almost nobody in energy markets or technology markets has connected yet.

The direct investment exposure runs through those industrial gas majors – Linde, Air Products and Air Liquide – who sit between Qatari production and the semiconductor fabs, and whose allocation decisions will determine which customers feel shortages first. The Watchlist examines which of the three is best positioned if the disruption extends.

Where this leaves you

The fertiliser-to-food inflation loop is already running and absent from central bank models. The chemicals re-rating is real but investors are pricing the windfall, not the structural shift underneath it. And the helium disruption is quietly building a risk inside the AI trade that almost nobody has joined up yet.

The market is still calling this an oil shock. It stopped being only an oil shock around the time a Missouri farmer found a $140 per ton price increase on the urea sitting in his supplier’s warehouse.

The crude price will eventually come back down. The system being rewired around it will not.