Fuel Hoarding Threatens Global Supply Chains

Lead paragraph

Global markets are increasingly pricing in the secondary impacts of the Iran war as governments and commercial actors begin hoarding fuel and fertilizer supplies, a behavior that Bloomberg reported on March 25, 2026 could remove an estimated 5–12% of available regional inventories in affected markets (Bloomberg, Mar 25, 2026). That reduction in free-floating stocks has translated into sharp price moves: Bloomberg's reporting links hoarding and trade restrictions to a 32% rise in benchmark urea prices since the start of the year, while diesel refiners have seen crack spreads widen materially versus a year earlier. The immediate shock is localized — ports, inland storage and short-haul logistics hubs — but the contagion is global because key choke points and fertilizer export corridors are concentrated in a handful of producers. For institutional investors, the observable consequences are elevated price volatility in energy and agricultural inputs, reordering of trade flows, and increased basis risk for businesses reliant on prompt physical deliveries.

Context

The conflict involving Iran has altered trade patterns at both macro and micro levels. According to Bloomberg's March 25, 2026 coverage, government-imposed export controls and informal private stockpiling have constrained normal cross-border flows of both refined products and fertilizer feedstocks; customs data and port manifests cited in the piece imply a 10%–12% decline in through-put at several Persian Gulf and Red Sea transshipment hubs compared with the same period in 2025. The policy responses — from discretionary export licensing to temporary bans on outbound shipments — are intended to secure domestic supply but are creating a perverse incentive to hoard, which reduces liquidity in physical markets and amplifies price discovery stress.

Historically, supply shocks of this nature have first manifested in the front end of the curve: prompt cargoes, spot freight, and local retail prices. In 2008 and 2010, for instance, localized stock draws pushed up regional rack prices and catalyzed cross-border arbitrage and rapid refilling once market participants adjusted. The present dynamic differs because modern fertilizer markets are already strained after multi-year underinvestment in ammonia and urea capacity; a 5%–10% withdrawal of available stocks can thus have outsized effects compared with similar volume shocks in the more liquid crude oil complex.

The immediate policy risk is that short-term measures intended to protect households or food security can harden into persistent fragmentation of trade. Bloomberg notes that several governments introduced temporary quotas and preferential allocation systems for domestic distributors during March 2026. While such measures may stabilize local retail prices in the very short run, they reduce the fungibility of product and complicate port-to-plant logistics for multinational buyers, increasing instances of cargo rebooking, demurrage, and re-routing.

Data Deep Dive

Three discrete data points drive the market narrative. First, Bloomberg (Mar 25, 2026) reports an estimated 5–12% removal of regional fuel stocks from free trade channels due to hoarding and official controls. Second, urea benchmark prices have risen approximately 32% since the start of 2026 in regions highlighted by the Bloomberg piece, with spot cargo premia widening relative to the 90-day average (Bloomberg, Mar 25, 2026). Third, diesel crack spreads versus Brent have widened materially YoY in Europe and parts of Asia — spot crack spreads in early March 2026 were cited as being roughly three times their levels from March 2025 in selected load zones, reflecting tight product availability and elevated demand for heating and agricultural logistics in the northern hemisphere spring season.

Freight data and port throughput statistics reinforce the price signals. Port manifests in the Eastern Mediterranean and Indian Ocean corridors showed a 9% decline in outbound fertilizer lifts in Q1 2026 versus Q1 2025 in the datasets Bloomberg examined, suggesting a combination of export curbs and private retention. Freight rates for short-haul bunker-adjusted voyages rose by double digits month-on-month in March 2026 for specific lanes that connect major fertilizer producers to consumers in South Asia, based on shipping data cited in the same reporting. Those logistic strains amplify effective scarcity: cargoes exist but are not moving at pre-crisis velocity.

Comparatively, global crude balances remain less stressed because crude can be stored and blended across a broader set of facilities; refined products and bulk fertilizers are more proximate to end demand and therefore more sensitive to inventory tightening. Year-on-year comparisons show divergence: while global crude stocks may have tightened marginally, refined product inventories in key consuming regions have contracted meaningfully compared to the same quarter in 2025, creating a sharper price response for refined fuels and fertilizer intermediates.

Sector Implications

For refiners, fertilizer manufacturers, and agricultural consumers, the near-term impact is a reallocation of margin and working capital. Refiners with integrated petrochemical and fertilizer feedstock production stand to benefit relatively, as they can internalize some input shortages and prioritize the most valuable runs. Bloomberg's reporting of widened diesel cracks suggests incremental margin capture for refiners that can secure feedstock and navigate export licensing; yet this benefit is uneven and region-specific. Independent refiners lacking downstream integration face inventory write-ups and potential margin compression if they cannot pass elevated costs through to consumers.

Agricultural producers in import-dependent markets face a distinct timing risk. Fertilizer cost spikes translate into deferred or forgone applications in the coming planting cycles, which could depress yields and amplify food-price inflation in 2026–27. On a company level, fertilizer traders and logistics providers are seeing stretched working capital cycles as cargoes are held longer: Bloomberg notes instances of demurrage and rebooking as buyers prioritize domestic allocations. Compared with peers in less exposed supply chains (e.g., industrial metals), fertilizer and refined product markets are showing higher realized volatility and increased tail risk in forward curves.

Financial counterparties should also assess collateral and margin protocols tied to physical inventories. Banks and trading houses financing working capital could face higher default correlation if price spikes trigger operational delays and if receivables are tied to delayed cargoes. The compositional shift of where inventories sit — moving from distributed commercial hands to concentrated government-controlled storage — changes counterparty exposure and may reduce the velocity of collateral liquidation in stress scenarios.

Risk Assessment

Policy risk is the dominant near-term factor. If more countries impose export restrictions through the spring planting season, expect further fragmentation and an upward shift in the cost-of-carry for physically delivered product. Market participants must also watch the Black Sea, Bab el-Mandeb and Strait of Hormuz transits: any episodic closure or escalation could materially increase freight and insurance premia, adding another 5%–15% to landed costs depending on the lane, as insurers price geopolitical risk into war-risk premiums.

Operationally, storage capacity and inland logistics constitute a secondary constraint. Even if producers increase shipments to pre-crisis levels, congestion at ports and inland hubs — where hoarded stocks sit — will delay absorption. Counterparty concentration risk increases when a small number of storage holders control a disproportionate share of available product; historically, such concentrations have led to sharp squeeze events and rapid price moves when those holders attempt to monetize positions.

Credit risk should be monitored with granular stress tests that link price shocks (e.g., +30% fertilizer prices, +50% local diesel rack) to balance-sheet outcomes for midstream and trading counterparties. Liquidity facilities that assume predictable cargo rotation may be overstated in this environment. The persistence of hoarding behavior — whether two months or twelve months — will determine whether markets correct through additional supply or through demand destruction.

Outlook

Over a 3–6 month horizon, markets are likely to remain volatile with intermittent price dislocations. If export channels reopen and shipping corridors normalize, expect partial mean reversion: some hoarded inventories will flow back and spread compression will follow. However, if governments convert temporary measures into sustained protectionism, structural fragmentation could push forward curves higher and increase basis differentials across regions. The critical inflection points to watch are policy announcements on export licensing, shipping-insurance developments, and planting season demand metrics from major importers in South and Southeast Asia.

From a macro standpoint, the broader economy could see a modest pass-through into headline inflation metrics: fertilizer and transport fuel are upstream cost items that affect food and industrial goods. Historical analogues suggest that sustained input-price shocks for fertilizers can add 20–40 basis points to consumer food inflation in import-dependent economies over a 12-month window, depending on substitution and governmental price support measures.

Fazen Capital Perspective

Fazen Capital views the current hoarding dynamic as a liquidity and allocation problem rather than a pure production shortfall. The distinction matters: if the constraint is liquidity — cargoes exist but are withheld — then policy shifts, confidence-building measures and trade facilitation can materially ease prices without new physical output. A contrarian insight is that targeted multilateral interventions that improve transparency in inventories (e.g., port-level reporting, temporary opening corridors under international oversight) could be more effective and faster than adding production capacity, which takes years. We recommend investors and corporate risk managers model scenarios where stock release programs or temporary corridor agreements reduce effective scarcity by 3–8% over 60–120 days, and stress-test pricing and counterparty exposures under that assumption. For additional context on inventory transparency and commodity risk frameworks see our work on commodity insights and operational hedging strategies in regional markets at Fazen Capital Insights.

Bottom Line

Hoarding driven by trade restrictions and risk-management behavior is amplifying an already fragile fuel and fertilizer complex; policymakers and market participants should prioritize transparency and targeted trade facilitation to reduce acute scarcity and limit economic spillovers.

Disclaimer: This article is for informational purposes only and does not constitute investment advice.

FAQ

Q: Could a release of strategic reserves quickly resolve the price spike? A: In theory, releasing strategic reserves can provide immediate relief to local markets; however, strategic reserves are often limited in size and earmarked for specific domestic uses. Bloomberg's reporting on March 25, 2026 suggests that current hoarding has removed an estimated 5–12% of tradable stocks in affected corridors — a comparable release would be needed to materially lower spot premia, and such releases require coordination and clear distribution plans to avoid simply shifting shortages to other geographies.

Q: How have similar hoarding events affected planting cycles historically? A: Historically, fertilizer hoarding and price spikes have led to delayed or reduced application rates in vulnerable markets, with observable yield impacts in the subsequent 6–12 months. For example, prior regional supply disruptions have reduced top-dressing rates by 10%–20% in sensitive crops, translating into measurable downward pressure on yields and upward pressure on domestic food prices. These effects depend on the timing relative to planting and the availability of substitution or credit support.

Q: Are there investment structures that capture dislocations without taking delivery risk? A: Traders and financers often use basis contracts, freight-forward hedges, and structured off-take agreements to capture regional premia without assuming physical delivery obligations. Such structures mitigate logistical risk but introduce counterparty and margin-call exposure; rigorous stress-testing of working-capital facilities is essential when forward curves exhibit steep backwardation or elevated short-term volatility.