Australia’s reliance on imported urea is a clear strategic weakness that is allowing the instability in the Gulf region to directly affect our food production, transport systems and economic stability. Establishing a system that tracked urea prices would help the country to prepare for such disruption.
Urea is a key ingredient in high-nitrogen fertiliser used for growing grains, horticultural crops and pasture, and in diesel exhaust fluid needed by trucks to meet emissions standards. So shortages of it quickly create disruptions across several sectors.
Much of Australia’s urea comes from the Middle East, where natural gas is turned into ammonia and then into urea. Australia imports some 95 percent of its urea, and of that, around 65 to 70 percent typically comes from Middle Eastern producers (the United Arab Emirates, Saudi Arabia, Qatar, Bahrain and Oman). Production of the fertiliser is therefore closely linked to gas markets. Deliveries rely on shipping, especially through the Strait of Hormuz.
This means that when trouble arises in the Gulf region, Australia quickly suffers shortages and higher prices. If the situation destabilises further, Australians will likely face further rising costs and find it harder to source essential goods.
In farming, higher urea prices lead to less fertilising, which reduces crop yields and raises food prices. In transport, a shortage of diesel exhaust fluid can stop trucks, disrupting supply chains and production lines. Previous supply scares have shown how quickly these problems can escalate into larger economic risks. Examples include the world food price crisis in 2007–08, the 2021–22 global fertiliser shock driven by soaring gas prices, China’s 2021–22 fertiliser export restrictions, and Russia’s disrupted fertiliser exports after 2022 sanctions.
Unlike fuel, urea in Australia is subject to no Minimum Stockholding Obligation or strategic reserve, leaving supply entirely dependent on commercial imports and exposed to global market timing risks.
This is why the government needs a system to track market signals.
Markets often spot risks before governments do and respond to future risks in shipping.
Changes in urea prices can indicate tightening supply conditions, but they often reflect forward-looking behaviour (buyers anticipating shortages and securing contracts early). These indications are much the same as those associated with oil supplies.
Urea prices jumped in early 2026 due to constraints on natural gas supply and pricing in the Gulf – driven by production caps, maintenance outages and strong export demand for liquefied natural gas – which reduced ammonia output and tightened export availability before the full effect reached Australia’s supply chains
The market was showing that urea prices were being pushed up by energy markets, production limits and logistics. Fast price jumps, especially after geopolitical events, predict stress across the whole system.
Policymakers should regularly track urea prices and identify price changes as early warnings of emerging supply risks. If prices keep rising, they can act quickly to find new suppliers, lock in contracts and work with industry to manage demand. Acting early is much cheaper than waiting until shortages hit.
No new data is required to establish a urea price tracking system, as commodity prices are already widely available and frequently updated. The real challenge is interpreting these signals. The government should integrate urea prices with indicators such as maritime insurance premiums, freight rates and natural gas prices to trace how geopolitical shocks move through energy and logistics systems into the real economy. This would reduce uncertainty not by eliminating it but by shortening the gap between early warning and real-world impact.
Since urea is an essential commodity across our food, transport and industrial systems, and supply relies on geopolitically unstable regions, we must treat price changes as a critical indicator of future stress on these systems. If we treat urea as just another routine input, we underestimate the risk.