The Hormuz Crisis and Global Sulphur Supply in 2026: What European Buyers Need to Know

The Strait of Hormuz — the narrow waterway between the Omani and Iranian coastlines at the mouth of the Persian Gulf — is the single most consequential maritime chokepoint for the global energy and commodities system. At its narrowest, the strait measures approximately 54 kilometres across, with navigable shipping lanes of roughly 3.2 kilometres in each direction. In normal operating conditions, it handles approximately 21 million barrels of crude oil per day, representing around 21% of global oil consumption. Less widely understood is its role in the sulphur supply chain.

Sulphur as a Refinery By-Product

Sulphur — the elemental compound critical to phosphate fertilizer production — is not mined in most of its commercial quantities. The overwhelming majority of commercially traded sulphur is recovered as a by-product of petroleum refining and natural gas processing. When crude oil or natural gas contains hydrogen sulphide (H₂S), processing facilities capture and recover it as elemental sulphur — a process mandated by environmental regulations in virtually all producing countries. This means that the world's largest sulphur producers are, in effect, the world's largest oil and gas producers.

The Persian Gulf states — Saudi Arabia, Qatar, UAE, Kuwait, and Iran — together account for approximately 35–40% of global sulphur production. Their combined gas processing and refining capacity generates enormous sulphur volumes that must be exported, as domestic consumption is limited. Qatar's Ras Laffan Industrial City alone processes over 70 million cubic metres per day of natural gas, generating significant sulphur by-products that are exported as granulated or prilled sulphur via purpose-built bulk terminals.

The January–March 2026 Disruption

In January 2026, escalating regional tensions led to a series of maritime incidents in the Strait of Hormuz that substantially disrupted normal shipping operations. Insurance markets — already pricing East of Suez war risk at elevated premiums — sharply increased coverage costs for vessels transiting the strait. Several major shipping groups suspended Hormuz-transiting services pending security assessments. The effect was a de facto partial closure: tankers and bulk carriers carrying sulphur, fertilizers, and other commodities faced a combination of route availability uncertainty, insurance cost increases, and port scheduling disruptions that effectively removed a significant volume of Persian Gulf origin sulphur from the spot market for approximately 8–10 weeks.

According to Lloyd's List intelligence and vessel tracking data published by S&P Global Commodity Insights, sulphur export loadings from Ras Laffan (Qatar) fell by approximately 55% in February 2026 compared to the same month in 2025. Saudi Aramco's sulphur exports from Jubail and Yanbu were less affected (Red Sea routing is unaffected by Hormuz). Iranian sulphur exports — already operating under existing OFAC sanctions that restrict most Western buyers — were effectively halted for non-sanctioned buyers during the period.

The strait has since partially reopened to commercial traffic, but insurance premiums for East of Suez routing remained elevated through Q2 2026, and the spot market impact has persisted through cascading secondary effects on OCP production and global fertilizer trade flows.

To understand why a sulphur disruption translates directly into a phosphate shortage, it is necessary to understand the chemistry and economics of phosphate fertilizer production.

The Chemistry: Why Phosphate Needs Sulphur

Converting phosphate rock (the mined raw material) into marketable phosphate fertilizers — specifically diammonium phosphate (DAP) and monoammonium phosphate (MAP), which together represent the majority of globally traded phosphate fertilizer volumes — requires sulphuric acid (H₂SO₄) as a processing reagent. The reaction between phosphate rock and sulphuric acid produces phosphoric acid (H₃PO₄), which is then reacted with ammonia to produce DAP or MAP. The ratio of sulphur required to produce one tonne of phosphoric acid is approximately 0.4–0.5 tonnes of sulphur. For every one million tonnes of phosphate fertilizer capacity, a producer requires approximately 400,000–500,000 tonnes of sulphur per year.

OCP's Scale and Sulphur Dependency

OCP Group — the state-controlled Moroccan company, the largest phosphate producer and exporter in the world — operates an integrated phosphate-to-fertilizer production chain at its Jorf Lasfar and Safi complexes. OCP's total phosphate fertilizer production capacity is approximately 12 million metric tonnes per year, requiring approximately 5–6 million tonnes of sulphur annually. OCP has historically sourced sulphur primarily from the Middle East (Qatar, Saudi Arabia, UAE), with supplementary volumes from Kazakhstan and Canada.

The 2025 Pre-Crisis Constraint

Before the Hormuz disruption in Q1 2026, OCP was already operating under sulphur supply constraints. According to OCP's published communications and analyst reports from CRU Group and S&P Global Commodity Insights, a series of supply disruptions in H2 2025 — including a production outage at a major Qatar LNG facility and logistical disruptions in Kazakhstani Black Sea transit — had already reduced OCP's sulphur inventory to sub-optimal levels by end-2025.

OCP's effective production utilisation rate fell to approximately 65–70% of nameplate capacity in Q4 2025, translating into a significant reduction in DAP/MAP output. This pre-existing constraint meant that when the Hormuz disruption struck in January 2026, OCP had minimal buffer inventory with which to absorb the shock.

Quantifying the Output Reduction

CRU Group estimates that OCP's actual DAP+MAP production in Q1 2026 was approximately 1.8–2.0 million metric tonnes, versus a normal quarterly rate of approximately 2.8–3.0 million metric tonnes — a production shortfall of approximately 800,000–1,200,000 metric tonnes in a single quarter. Annualised, this represents a reduction of 3.2–4.8 million metric tonnes of DAP/MAP equivalent.

For European importers of Moroccan phosphate fertilizers, who collectively represent approximately 30–35% of OCP's export volumes (particularly Spain, France, Germany, Poland, and the UK), the practical effect has been delayed shipments, force majeure notifications on existing contracts, and sharp increases in spot pricing.

Source: S&P Global Commodity Insights, Argus Media phosphate assessments, Q1 2026

Sulphur has historically traded at modest prices — its status as a mandatory by-product of petroleum refining means that producers have incentives to sell at almost any price to avoid accumulation costs. The structural change in 2026 has been dramatic.

Historical Sulphur Pricing Context

Sulphur prices are volatile and historically linked to three factors: the level of global refining activity (which determines supply), fertilizer demand (which determines primary consumption), and logistics costs (which determine delivered economics). Prices collapsed to near-zero during the COVID-19 demand shock (2020), recovered to $400+/MT during the 2022 energy crisis, and then normalised to $95–115/MT CFR Mediterranean in 2024.

The 2026 Price Spike

The combination of Hormuz disruption (affecting Persian Gulf supply) and pre-existing OCP inventory depletion drove sulphur spot prices to levels not seen since the 2022 peak:

Source: Argus Media sulphur assessments, compiled from public price indices

China's August 2026 Export Pause

Compounding the supply disruption, China — the world's third-largest sulphur exporter after Saudi Arabia and UAE — announced in April 2026 a temporary suspension of sulphur exports effective August 2026, citing domestic agricultural season priority. China's sulphur export volumes typically represent approximately 3–4 million MT/year, primarily to India, South Korea, and other Asian markets. While the pause is stated as temporary, it reduces the secondary market that European buyers can access as an overflow valve, further tightening Mediterranean-delivery availability.

Supply Chain Substitution Dynamics

The acute disruption has accelerated several substitution dynamics that were previously nascent:

• Kazakhstani sulphur — recovered at Tengiz and Kashagan fields, exported via the Caspian-Ural pipeline and Aktau Port (Caspian Sea) with onward transit to Novorossiysk (Black Sea) — has seen sharp volume increases. Kazakhstan shipped approximately 800,000 MT in Q1 2026, versus approximately 550,000 MT in Q1 2025, a 45% volume increase. However, logistics costs for the Caspian-Black Sea-Mediterranean route are approximately $80–110/MT higher than direct Persian Gulf-Mediterranean.
• Canadian sulphur — exported from Vancouver (primarily recovered at Alberta oil sands facilities) — is a reliable supply source but requires longer transit times (20–25 days to Mediterranean ports versus 8–12 days from the Gulf). Canadian volumes are fully contracted to traditional buyers, with limited spot availability.
• European refinery by-product — LOTOS/Orlen (Poland), TotalEnergies (France), Shell (Netherlands/Belgium) — generates sulphur as a refinery by-product but volumes are relatively small (500,000–800,000 MT/year across all European refineries combined) and largely contracted domestically.

European fertilizer producers — primarily Yara International (Norway/Europe-wide), Fertiberia (Spain), K+S (Germany), Borealis (Austria/Belgium), Grupa Azoty (Poland), and Agropolychim (Bulgaria) — are navigating a supply environment of unusual severity.

Yara International

Yara, the world's largest nitrogen fertilizer producer, operates integrated phosphate processing at its Köping (Sweden) and Le Havre (France) facilities. These facilities primarily process phosphate rock sourced from Morocco (OCP) and, historically, from Russia. The OCP supply reduction and continued restrictions on Russian-origin materials (due to EU sanctions associated with the Ukraine conflict) have created a dual-source constraint for Yara's European operations. Yara's Q1 2026 results (published April 2026) noted a 12% reduction in phosphate production volumes year-on-year, attributed to raw material supply constraints.

K+S and Fertiberia

K+S (Germany), primarily a potash and salt producer, sources phosphate for blended fertilizer production. Fertiberia (Spain), the leading Iberian fertilizer producer, has historically been heavily dependent on OCP-origin phosphate rock. Both companies issued supply constraint notices to agricultural distributors in Q1 2026.

Agropolychim (Bulgaria)

Agropolychim — historically one of the European fertilizer producers with the closest supply relationships with Syrian-origin raw materials prior to the civil war and sanctions — operates an ammonia-phosphate complex at Devnya, near Varna on the Black Sea. Its geographic position (close to Constanța, Romania and Varna sea routes) gives it natural access to both Kazakhstani sulphur via Black Sea routing and potentially to Syrian phosphate via the Mediterranean-Black Sea routing through the Turkish Straits.

The Sulphuric Acid Downstream Cascades

Beyond direct fertilizer producers, the sulphur shortage has cascading effects on:

• Titanium dioxide (TiO₂) producers — use the sulphate process which requires sulphuric acid
• Lithium processing — sulphuric acid used in spodumene-to-battery grade lithium conversion
• Metal leaching operations — copper, cobalt, nickel hydrometallurgy
• Pharmaceutical intermediates — multiple synthesis pathways require H₂SO₄

These non-agricultural industrial users compete with fertilizer producers for available sulphuric acid volumes, further tightening the supply picture.

Practical Procurement Responses

European industrial buyers are responding through several strategies:

1. Contract term extension — locking in 12–24 month supply agreements at current elevated prices to gain certainty
2. Geographic diversification — moving purchasing allocation from OCP-Morocco to Jordan (Arab Potash Company / JPMC), Egypt (Abu Tartur), and emerging Syrian origin
3. Inventory build — where storage infrastructure allows, pre-purchasing sulphur or phosphate rock ahead of the traditional agricultural buying season
4. Product substitution — evaluating whether some DAP/MAP volumes can be replaced by single superphosphate (SSP), which uses lower-grade phosphate rock and reduced sulphuric acid quantities

The disruption to global phosphate-fertilizer supply chains has materially increased interest in Syrian phosphate as an alternative origin. Beyond the obvious supply diversification rationale, there is a specific processing economics argument that becomes compelling in a sulphur-constrained environment.

G4 Grade and Sulphuric Acid Consumption

The quantity of sulphuric acid required to process phosphate rock into phosphoric acid is inversely related to the P₂O₅ content of the input rock — but not linearly. Higher-grade rock (30–34% P₂O₅, such as OCP premium or Jordanian origin) requires less sulphuric acid per tonne of finished phosphoric acid than lower-grade rock (24–28% P₂O₅, such as Egyptian Abu Tartur or some Algerian origins), because the gangue (non-phosphate mineral content) that must be dissolved is proportionally lower.

Syrian G4 rock (28–30% P₂O₅) sits in the mid-range. Compared to lower-grade alternatives that buyers might consider as they diversify away from OCP:

In absolute terms, Syrian G4 requires approximately 12–15% more sulphuric acid per tonne of P₂O₅ produced than premium Moroccan origin. However, compared to the lowest-grade alternatives that European buyers might be forced to consider as OCP volumes tighten, Syrian G4 represents a meaningful efficiency advantage.

The Post-Sanctions Supply Timing

EU sanctions on Syrian phosphate trade were lifted in May 2025. As of the publication of this article (May 2026), the first structured Syrian phosphate export transactions for European buyers are either in execution or in final negotiation stages. The General Establishment of Geology and Mineral Resources (GEGMR), the Syrian state entity responsible for phosphate, has resumed engagement with international buyers. Transit through Tartous port (the primary Syrian Mediterranean export terminal) is operationally available, though banking and trade finance remain a friction point for certain European institutions.

For a detailed analysis of Syrian phosphate specifications, the Tartous port infrastructure, the sanctions timeline, and practical buyer guidance, see: [Syrian Phosphate in 2026: A Complete Guide to the Reawakened Source](/en/insights/phosphate/syrian-phosphate-2026-guide).

Volume Realism

Syrian phosphate volumes in 2026 cannot substitute for OCP at scale. Realistic export volumes for 2026 are in the range of 200,000–500,000 metric tonnes — meaningful for a single buyer seeking 50,000–100,000 MT/year, but insufficient to fill the multi-million-tonne gap created by the OCP capacity reduction. The value of Syrian origin in 2026 is as a diversification source and a relationship-building exercise for what may become a 1–3 million MT/year supply relationship by 2028–2030, as Syrian infrastructure and production capacity is rehabilitated.

For European fertilizer producers and industrial sulphur users who are seeking to reduce their Persian Gulf / OCP dependency in light of 2026 conditions, the following alternative sources are commercially viable to varying degrees.

Kazakhstan: Largest Viable Alternative

Kazakhstan's recoverable sulphur — primarily from the Tengiz and Kashagan oilfields, operated by TengizChevroil and the North Caspian Operating Company (NCOC) consortium — is the most significant non-Gulf supply source for European buyers. Annual production is approximately 4.5–5 million MT, with export capacity via the Caspian-to-Black Sea pipeline and Aktau Port.

Key logistics parameters:

• Route: Aktau (Kazakhstan) → Caspian Sea → Baku (Azerbaijan, rail) or Makhachkala (Russia, rail) → Novorossiysk (Black Sea) → Mediterranean ports
• Transit time: 18–25 days Aktau to Constanța (Romania) or Varna (Bulgaria)
• Logistics cost premium vs. Gulf: approximately $80–110/MT
• Availability: 60–70% is on long-term contracts; spot availability is limited but exists
• Key trader intermediaries: Trammo, Helm AG, Ameropa

Practical note: Routing through Russian territory (Makhachkala) introduces sanction-related due diligence requirements for EU buyers. The Azerbaijani routing (Baku) avoids Russian territory but is of more limited capacity.

Canada: Reliable but Remote

Canada — primarily Alberta oil sands and conventional oil processing — exports sulphur via the Port of Vancouver (Fibreco Export terminal). Annual export capacity is approximately 2.5–3 million MT, with the majority contracted to Asian buyers (India, China, Morocco).

• Transit time: 22–28 days Vancouver to Mediterranean
• Logistics cost premium vs. Gulf: approximately $120–150/MT
• Spot availability: Very limited — buyers need 12+ month relationships to access volumes

European Refinery By-Product

While modest in volume (500,000–800,000 MT/year across all European sources), domestic European sulphur recovery from refineries represents a zero-logistics-cost option for nearby buyers. Key sources:

• Poland: LOTOS (now part of Orlen) — Gdańsk refinery by-product, approximately 150,000–200,000 MT/year
• Germany: Bayernoil, Rostock refinery
• France: TotalEnergies Normandy refinery — approximately 80,000–120,000 MT/year
• Netherlands/Belgium: Shell Pernis, Total Antwerp — historically export-oriented

For Agropolychim (Bulgaria) and other Black Sea-adjacent producers, the Kazakhstani routing is most logistically accessible. For Western European buyers (Fertiberia, K+S, Yara Le Havre), Canadian and European sources are more competitive despite higher pricing.

Iraq: An Emerging Supplementary Source

Iraq's Missan, Rumaila, and West Qurna oilfields generate sulphur as a by-product. Historically, accumulated sulphur blocks at Iraqi oilfields represented a storage challenge for the Iraqi government. Under the current environment, Iraqi sulphur exports (approximately 600,000–900,000 MT/year) are increasingly attractive, though logistics (Basra port, Khor Al-Amaya terminal) and contract structures require specialised expertise. Iraq is not subject to the same Hormuz transit risk as Qatar/UAE, as Basra terminal is in the northern Gulf and routing is less exposed to interdiction.

The 2026 supply disruption has forced European buyers to explore supply sources that come with elevated compliance complexity — principally Syria and Kazakhstan (via Russia-adjacent routing). The following summarises the key compliance and trade finance considerations.

Syrian Phosphate: Current Compliance Status

As of May 2026, EU economic and trade sanctions on Syria have been lifted (EU Council Decision, May 2025). The US Caesar Act was repealed in December 2025. The following compliance steps remain mandatory:

1. Counterparty screening: Any Syrian entity involved in the commercial chain must be screened against EU, OFAC, and UN consolidated lists. While commercial trade restrictions have been lifted, individual designations of named persons linked to the former Assad regime remain in effect. The selling entity (GEGMR or authorised intermediaries) must be clear of designations.
2. KYC/AML on beneficial ownership: Understanding the beneficial ownership chain of the Syrian trading counterparty is required under EU AML directives and FATF guidance.
3. Documentary requirements: Certificates of origin, quality certificates (SGS or Bureau Veritas), GEGMR authorisation documentation, and trade finance instruments are expected by compliant European banks.
4. Banking access: Several European banks are currently processing Syria-origin trade finance. UBAF (Arab-French banking group), Arab Bank Switzerland, and certain Italian and German trade finance institutions have re-engaged. Major French banks (BNP Paribas, Société Générale) remain cautious. Buyers using Spanish or German banking relationships may find more favourable trade finance appetite.

For a detailed compliance checklist and banking guidance, see: [EU Syria Sanctions Lifted in 2025: A Practical Guide for Traders and Buyers](/en/insights/sanctions-compliance/eu-syria-sanctions-lifted-may-2025).

Kazakhstani Sulphur via Russian Transit: Compliance Nuances

Where the supply route involves transit through Russian territory — specifically via Makhachkala (Russian Federation) — EU buyers must assess:

• Whether the transaction constitutes a payment or commercial relationship with Russian-domiciled entities that may trigger EU sanctions against Russia
• Whether the sulphur itself is of Russian origin (Kazakhstani origin rock transiting through Russian territory does not become Russian-origin, but documentation must be clear)
• Insurance coverage — certain Lloyd's syndicate policies exclude Russian transit segments

The Azerbaijani alternative routing (Aktau → Baku by rail → Poti, Georgia → Mediterranean by ship) is fully clear of Russian-territory concerns, though it is slightly more expensive and of more limited capacity.

Trade Finance Instruments

Given elevated counterparty complexity in 2026 supply chains, the recommended trade finance structures are:

• Irrevocable documentary letters of credit (L/C): Preferred by sellers from emerging-origin markets (Syria, Kazakhstan)
• Performance bonds: Required for larger contracts (10,000+ MT) from new counterparties
• Staged settlement structures: First shipment payment terms of 30% advance + 70% against documents are common for new relationships

The 2026 supply disruption is a structural inflection point, not a temporary aberration. The following considerations frame the medium-term outlook.

Hormuz: Structural vs. Episodic Risk

The Q1 2026 partial closure demonstrated that Hormuz transit risk — long acknowledged but historically discounted by commodity markets — can materialise rapidly. The insurance and logistics premium for East of Suez routing has structurally re-rated, with war risk insurance for Gulf routing now priced at levels that add $15–25/MT to sulphur delivered costs on a permanent basis (even absent further incidents).

Gulf-state producers (Qatar, UAE, Saudi Arabia) are responding by accelerating investment in granulation and storage facilities designed to allow inventory build-up that reduces sensitivity to short-term transit disruptions. However, this will take 18–36 months to materialise.

OCP's Sulphur Diversification

OCP has publicly stated its intention to reduce dependence on Persian Gulf sulphur. The primary alternatives it is pursuing are: (1) increased procurement from Kazakhstan via the Atlantic sulphur trade; (2) development of a captive sulphuric acid recycling facility at Jorf Lasfar; (3) exploration of sulphur extraction from its own Jorf Lasfar gypsum by-product stockpiles (a technically possible but economically challenging approach). These initiatives are expected to partially mitigate OCP's Gulf dependency by 2027–2028.

Syrian Phosphate in the Medium-Term Supply Picture

Syria's potential contribution to the global phosphate market by 2028 — if infrastructure rehabilitation proceeds, banking normalises, and counterparty relationships are established — is estimated at 1–3 million metric tonnes per year. This is modest on a global scale (50+ million MT/year traded) but meaningful at the European buyer level. The 2026 supply disruption has accelerated the timeline for European buyers who were previously watching the Syria situation from a distance. Several procurement directors from European fertilizer producers are now actively investigating Syrian origin, following prior hesitation due to residual compliance concerns.

The commercial window for establishing early relationships with Syrian phosphate suppliers is, in AURONEX's assessment, Q2–Q4 2026 — before the market becomes congested and before GEGMR has established its full commercial infrastructure that may come with higher price expectations.

Analyst Consensus Outlook

Sources: CRU Group, S&P Global Commodity Insights, IFA, AURONEX estimates. Forecasts are consensus ranges from publicly available analyst reports and are subject to significant uncertainty. Not investment advice.

The following represents practical considerations for European fertilizer producers and industrial sulphur users navigating the current environment. This does not constitute commercial advice.

Sulphur Procurement

1. Extend contract terms now: The spot premium versus term pricing for sulphur has narrowed as the market has partially tightened. Buyers who have historically relied heavily on spot procurement should evaluate 12–24 month term contracts with Kazakhstani, Canadian, or European-refinery sources to secure volume certainty.
2. Dual-source your supply chain: Establish at minimum two independent supply relationships — Gulf-origin (if timing allows) plus one non-Gulf source. The 2026 episode demonstrates the concentration risk of single-source dependency.
3. Storage infrastructure: If your facility has underutilised storage capacity, this is an appropriate moment to build sulphur inventories towards the higher end of your normal range, given the forward price structure (backwardation from current spot highs).

Phosphate Rock Procurement

1. Engage OCP now: OCP's current capacity constraints are temporary. Buyers who have existing OCP relationships should maintain and potentially deepen them — OCP will resume full capacity as its sulphur supply normalises. Abandoning OCP as a supplier to chase cheaper alternatives now may result in loss of allocation when capacity normalises.
2. Investigate Syrian origin: If your compliance and trade finance infrastructure can accommodate the additional diligence required for Syria-origin transactions, Q2–Q3 2026 represents a favourable window to establish first-purchase relationships. Volumes are limited; first-movers will establish preferential commercial relationships.
3. Quality verification: For any new-origin phosphate rock, require SGS or Bureau Veritas certification at port of loading AND port of discharge, with maximum specified limits for Cd, Pb, As, Hg, and other regulated heavy metals under EU Regulation 2019/1009.

Logistics and Insurance

1. Review your war risk coverage: Ensure your cargo and trade credit insurance explicitly covers current routing (East of Suez, Black Sea). Many generic policies have exclusions or sub-limits for current risk areas that were previously theoretical.
2. Performance bonds: For contracts with new counterparties from non-OECD origins, require performance bonds from the seller's bank. This is standard market practice and a reasonable expectation regardless of the commercial relationship quality.
3. Force majeure clause review: Review existing supply contracts for force majeure clause definitions, particularly those relating to Hormuz transit. Understand your legal position before the next disruption, not during it.

Consult qualified logistics, legal, and compliance advisors before implementing any of the above. This article is informational and does not constitute professional advice.