Hormuz Closure Lifts Diesel and Fertilizer Costs
Farm operators and freight carriers face higher fuel and input costs as the strait remains disrupted.
Updated on Nov. 3, 2026 in Oil and Gas
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Closure of the Strait of Hormuz in early March 2026 has pushed up prices for oil, diesel, refined products, and fertilizers. For operators in energy, agriculture, and freight, the disruption has raised input costs across the supply chain.
Why it matters
The strait previously carried 38% of the world's crude oil, so its closure removes a major share of supply and forces oil to move through it at a high cost. Shipping and logistics now account for 30% of oil transit costs, up from under 5% at the start of the year, and fertilizer prices have followed as ammonia shipments declined.
The average U.S. on-highway diesel price reached $6.292 a gallon through Nov. 2, up 67.6% from a year earlier, and heating oil hit $4.52 per gallon, up 84.64% year over year. Higher diesel prices added $2.39 billion to U.S. planting and harvesting costs, and U.S. strategic petroleum reserves are at their lowest level since the early 1980s.
The players
Strait of Hormuz
A 24-mile-wide maritime chokepoint through which 38% of the world's crude oil previously moved, making its closure a major source of global supply disruption.
Trinidad and Tobago
A Caribbean nation whose declining ammonia shipments contributed to fertilizer price increases in the United States.
The details
Oil has been moving through the Strait of Hormuz at a high cost, with shipping and logistics now making up 30% of transit expense. Fertilizer is affected through the same chokepoint: ammonia prices spiked 45% this summer after shipments from Trinidad and Tobago declined. Without reasonably priced fertilizer, farmers may cut usage, which could lower crop yields. Diesel stocks are at their lowest level since the late 1980s, leaving less buffer against further price moves.
Timeline
Early March 2026: The Strait of Hormuz closed to trade.
April 2026: Urea prices fell from record highs.
Summer 2026: Ammonia prices spiked 45%.
Nov. 2, 2026: The average U.S. diesel price reached $6.292 a gallon.
Market Landscape
The Strait of Hormuz closure resembles the 1970s oil shocks, when Middle East supply disruptions pushed energy and input prices sharply higher across importing economies. The present disruption is distinctive in that strategic reserves and diesel stocks are at multi-decade lows, leaving less buffer than in prior episodes.
Operators should budget for elevated diesel and fertilizer costs while the strait remains disrupted, since shipping now carries a large share of oil transit cost. Farm and agribusiness operators should review fertilizer procurement and planting-cost assumptions, and freight-dependent businesses should revisit fuel surcharges and pricing terms.
The takeaway
The key operating insight is that the disruption now reaches far beyond crude, touching diesel, heating oil, and the fertilizer that feeds the agricultural supply chain. Operators should track weekly diesel averages and fertilizer contract pricing against their current cost assumptions.
Further reading
For broader context on how supply shocks move through energy markets, see the Oil and Gas section.
Source note: This article includes information reported by HOTELS magazine.
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