War Economy and Agriculture

Urea Fact Sheet

Global urea production reached more than 200 million metric tons in 2025. The market is rapidly expanding due to agricultural demand, with production capacity projected to reach around 300 million metric tons by 2030. Urea demand is heavily driven by agriculture, with Asia-Pacific accounting for roughly 61% of market share, North America at 10%, Europe at about 7%, and the rest in other regions.

The market is projected to grow at a Compound Annual Growth Rate (CAGR) of 3.05%-3.9% through 2029-2034, driven by food demand for a growing global population. Key production centers include China, India, and the Middle East (Qatar, Oman, Saudi Arabia), with significant expansions planned to meet growing demand. More than 80% of urea is used in agriculture, and the rest in the industrial sector.

Global Production Giants

Saudi Basic Industries Corporation (SABIC), a Saudi Arabian company, is a global chemical and fertilizer powerhouse. Qatar Fertiliser Company (QAFC) is one of the largest fertilizer producers in the Middle East.

CF Industries and Koch Fertilizer in the USA, Nutrien, and Agrium (now part of Nutrien) in Canada are major players in the global fertilizer market in North America. OCI Nitrogen, Yara International based in Norway, and Borealis, an Austrian-based company, are giants in Europe.

Sinofert Holdings Limited (Sinochem Group), Hubei Yihua Chemical Industry, Henan Xinlianxin Chemical Industry (China XLX Fertilizer), and Yunnan Yuntianhua Co., Ltd are from China. IFFCO - Indian Farmers Fertiliser Cooperative Limited, National Fertilizers Limited (NFL), Chambal Fertilisers and Chemicals Limited (CFCL), and Coromandel International are major players in the Asian and global fertilizer market.

How Urea is Produced

Synthetic urea is a major product derived from the petrochemical industry, specifically using natural gas or petroleum feedstocks (naphtha) as the primary raw material. It is synthesized by combining ammonia (derived from hydrogen in natural gas/crude oil) and carbon dioxide, rather than being a direct byproduct of refining, but it is highly dependent on fossil fuels.

Consequences of Gulf War

One significant consequence of the Gulf War is the impact on chemical fertilizer production. Agricultural products require chemical fertilizer, with urea being a crucial component. The entire world depends on Middle East crude oil for the production of urea to increase agricultural produce to meet the demand for food, vegetables, fruits, etc. This war has led to a decrease in the mining of crude oil and processing of gasoline, resulting in a decrease in the production of chemical fertilizer. Consequently, the world will face a shortage of fertilizer, leading to decreased productivity and triggering food shortages globally.

 

Effects on Nepal

Nepal, which already faces a shortage of chemical fertilizer under normal circumstances, will experience severe problems with fertilizer availability during this extraordinary time of war. As paddy is a major food crop in Nepal and there are only two months left for its cultivation in the months of Aashad and Shrawan, there will be a severe shortage of food in Nepal due to the scarcity of fertilizer caused by the war.