Iran says it has reopened the Strait of Hormuz to ‘non-hostile vessels’, indicating it will continue to exert control over the strait until a deal with the USA is struck to end the conflict between the two countries, according to a BBC report.
In a post on X by its mission to the United Nations (UN), Iran said “non-hostile vessels” would be allowed to pass through the strait, provided they coordinated with Iranian authorities, the 24 March report said.
The message formalised a situation in which countries or companies had negotiated safe passage for their vessels as they passed through one of the world’s most important shipping lanes, the BBC wrote.
Vessels that had successfully passed through the Strait of Hormuz since the start of the month included ships from China, India and Pakistan, the report said.
According to reports by US and Israeli media, the issue of freedom of navigation through the vital waterway features prominently in a 15-point plan to end the war which the White House has sent to Iran via Pakistan.
Meanwhile, the Trump administration is reportedly preparing to deploy US ground troops to Iran, according to various media reports.
Against this backdrop, Malaysian fertiliser producers are pausing the delivery of new orders due to supply-chain disruptions and feedstock shortages driving up raw material prices, according to an 18 March Reuters report.
Around one-third of the world’s fertiliser trade normally passes through the Strait of Hormuz and the Gulf region is a major hub for natural gas production, which is the key feedstock for nitrogen fertilisers like urea and ammonia.
“Currently, raw material prices are increasing sharply, and suppliers are revising prices,” Malaysian manufacturer Union Harvest said in a notice reported by Reuters.
“Because of this, we are temporarily holding new orders until the new price is confirmed.”
In a similar notice to distributors, FGV Fertiliser – a subsidiary of palm oil major FGV Holdings – said it had suspended sales of all single-nutrient fertilisers such as urea, ammonium sulphate and muriate of potash with immediate effect, citing the impact of the global geopolitical situation on fertiliser supply.
Some raw materials had increased by 100%-150% within two weeks, according to Choon Chun Hong, general manager of Sabah Softwoods Hybrid Fertiliser, a supplier to estates in Indonesia and Malaysia – the world’s two largest palm oil producers.
“Fertiliser accounts for approximately 60% of total production costs in Malaysia, and if the war is prolonged, the price of raw materials will continue to go up,” Roslin Azmy Hassan, CEO of the Malaysian Palm Oil Association (MPOA), was quoted as saying.
Gulat Manurung, chairman of Indonesian smallholder farmers’ group APKASINDO, said rising import costs were pushing up prices for chemical fertilisers at the farmer level, leading farmers to combine it with organic fertiliser.
According to an 11 March New Straits Times (NST) report, the ongoing conflict in the Middle East was having a wider impact on Malaysia’s plantation sector, with analysts warning of rising costs and potential demand disruptions despite a temporary boost in crude palm oil (CPO) prices.
RHB Research analyst Hoe Lee Leng said shipping route closures near the conflict zone threatened demand from countries such as Egypt, Iran, Pakistan, Saudi Arabia, Turkey and the United Arab Emirates (UAE), potentially affecting up to 15% of global palm oil consumption.
Transport and logistic costs, which comprised around 5%-10% of total palm oil production costs, were expected to rise sharply, she added.
“Global freight costs have risen to all-time highs, while insurance companies are preparing for the possible activation of ‘notice of cancellation’ provisions in war-risk policies and for sharp spikes in war-risk premiums.”
CIMB Securities’ analyst Ivy Ng Lee Fang said while CPO prices had risen 9.5% since the onset of the conflict to MYR4,428 (US$1,123)/tonne, the benefit to planters could be offset by surging fertiliser costs and a potential slowdown in global demand if energy prices remained elevated.
The Malaysian Palm Oil Council (MPOC) said the sharp rise in gas oil prices in the global market had improved the competitiveness of biodiesel usage and blending.
