The war with Iran is driving up more than gasoline prices. It is beginning to hit semiconductors, medical imaging, backyard gardens and even children’s party balloons.
While much of the world is focused on how Iran’s essential closure of the Strait of Hormuz is damaging global energy markets, other key industries risk getting hit by similar price inflation. That’s because Hormuz is also a major shipping route for helium and fertilizer, which both affect a wide sector of the economy and are now experiencing price spikes as ships bottleneck on both sides of the strait.
“The longer it goes on, the more serious it's going to get,” said Rich Gottwald, CEO of the Compressed Gas Association.
The expected price increases come as the Trump administration attempts to assuage voters’ concerns over cost-of-living, and Republicans worry that the war’s ripple effects will hamstring their prospects in November.
Iran has now effectively blocked ships from crossing the strait, through which 20 percent of the world’s daily oil and natural gas supply travels, inflicting pain on global energy markets by driving the price of crude to roughly $100 a barrel. Iran’s new leader, Ayatollah Mojtaba Khamenei, indicated Thursday that won’t change soon, pledging that “the lever of blocking the Strait of Hormuz must also continue to be used.”
About a third of both the global helium and fertilizer supply passes through Hormuz. Half of the global supply of urea – a nitrogen-based fertilizer– and almost a third of the ammonia supply run through the straits, according to the American Farm Bureau Federation.
Prices are already spiking since global supplies are taking a hit right as many agricultural producers are beginning their Spring plants. Urea prices have jumped 30 percent since the Trump administration began bombing Iran, according to the Fertilizer Institute.
Meanwhile, helium spot prices have doubled since the war began, said Anish Kapadia, CEO of market research firm AKAP Energy. Qatar’s state-run energy firm haltedliquified natural gas production in the first days of the war and it is estimated it will takemonths to get it back up and running. The nation is a major producer of helium, which is a byproduct of liquefied natural gas production.
The Trump administration is beginning to acknowledge the downstream effects. Agriculture Secretary Brooke Rollins on Friday said "the president is very aware of these challenges and these issues” and promised relief for farmers was coming soon.
“We are very close to having an announcement on some solutions, on what that looks like. We're looking at every potential avenue to keep the fertilizer costs down as these farmers are going into planting season.”
A White House spokesperson declined to answer questions about the impact on the helium market, but acknowledged a plan for the agricultural industry and suggested the president has lowered such input costs.
“President Trump has stood up for our farmers more than anyone, including by lowering input costs, establishing Farmer Bridge Assistant payments, negotiating fairer trade deals, ending the death tax, and more,” White House spokesperson Anna Kelly said in a statement. “As the President said, these impacts are temporary, and the best is yet to come for our great farmers.”
Helium pressure builds
Semiconductor manufacturers heavily rely on helium to prevent certain chemical reactions in production, Gottwald said. MRIs also need helium to cool the magnets the machines need to function. Welding is also heavily reliant on helium. Meanwhile, party balloons account for about 10 to 20 percent of the market.
Interruptions or price spikes to semiconductor manufacturing could hit global markets for everything from computers to smartphones to vehicles to medical equipment.
“A lot of the world doesn't run without semiconductors and you can't make semiconductors without helium, period,” Gottwald said. “That will probably add pressure from a political perspective from all different countries around the world.”
The losses are already beginning to mount.
Pressure on the helium market won’t deflate for months because Qatar’s natural gas production facilities were damaged in the fighting, said Anish Kapadia, CEO of market research firm AKAP Energy. After the strait is reopened, he said, it would then take a while to put back into place specialized transportation containers, which are chilled to a temperature close to zero Kelvin, roughly negative-460 degrees Fahrenheit. So, even if the Strait of Hormuz were to reopen today, it would take two months for the market to return to normal, he said.
“It's absolutely massive,” he said. “On top of that, helium is notoriously hard to store, so unlike oil or natural gas, where you have large stores that you can then draw on in times of shortage, storage is very limited.”
The U.S. is the world’s leading supplier of helium, followed by Qatar. But, like any other commodity sold on the global market, the price of domestic supplies will jump as shortages ripple through the international supply.
On Friday, Defense Secretary Pete Hegseth told reporters that the Trump administration has a plan to reopen the strait but offered no details.
“We have been dealing with it, don’t need to worry about it,” he said.
Energy Secretary Chris Wright predicted this week that the Strait of Hormuz won’t reopen until the end of the month, though he did not outline any plan as to how that would happen.
A month-long shutdown could mean another 10 to 20 percent increase in prices but not a shortage, said Aleksandr Romanenko, CEO of market research firm IndexBox. If the shutdown lasts for two months, he expects “broader stress” and an increase of 25 to 50 percent.
“If the disruption stretches to three months, I would expect genuine shortages outside the best-buffered regions, especially in parts of Europe and Asia,” which are particularly reliant on Qatar’s supply.
The majority of semiconductor manufacturing takes place in Asia.
Fertilizer spikes could cause “record high” prices
Fertilizer demand in the U.S. is hitting just as the spring planting season begins.
The squeeze is hitting farmers on two fronts, with rising diesel fuel and fertilizer costs, American Farm Bureau Federation President Zippy Duvallwrote in a letter to Trump this week. He noted that the cost increase could drive inflationary pressure on the U.S. economy while also threatening national security if fertilizer shortages cut production and drastically raised food prices.
“These supply chain shocks are expected to drive already record-high input prices even higher at a time when farm margins are already extremely tight and many farmers are underwater,” he wrote.
While the U.S. produces some types of fertilizer, other countries are heavily reliant on imports, particularly during seasonal demand peaks. For instance, 97 percent of potassium used in the U.S. is imported, as well as 18 percent of nitrogen and 13 percent of phosphate, according to AFBF. The crops that rely heavily on spring fertilizer applications include corn, cotton and wheat.
“We are deeply concerned that failure to act could lead to disruptions to the food supply chain not seen since 2022 when food price inflation reached 40- year highs,” Duvall warned.
Food prices spiked due to similar disruptions to the global fertilizer market in 2022, after Russia invaded Ukraine, since Russia produced about 20 percent of global fertilizer supply. But the product eventually reached the market through a series of workarounds, noted theNorth Dakota State University Center for Agricultural Policy and Trade Studies this week. What’s more, because the Black Sea region was also a major producer of grain, it caused price spikes to crops that offset some of the farmer’s losses.
This time, without the strait fully open, there are few signs of relief.
“Storage fills, plants shut down, and the product simply does not reach the global market,” the center noted. “This is a harder form of supply disruption with no workaround.”
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