Urea futures slightly firmer on Middle East tensions

Urea futures rose today on a ratcheting up of tension in the Middle East, but the reaction has been limited with November Arab Gulf derivatives up by $2.50/t on the day.

The November Arab Gulf futures contract has traded multiple times today at $355/t fob, up by around $2.50/t on recent levels, with the deals taking place towards the high end of brokers' ranges for yesterday.

But spot availability of physical cargoes in the region is limited, and there has been no fresh business. Suppliers are holding back from the market until RCF's buy tender in India on 3 October. Argus assessed granular urea spot prices at $350-356/t fob last week.

The Israeli military said earlier today the US has identified an "Iranian network" that is preparing to launch a missile attack on Israel "in the near future", which has stoked a jump in oil prices. Israel began ground operations in southern Lebanon on 1 October, following the ramping up of an aerial strike campaign, while its military struck the Houthi-controlled Red Sea port of Hodeidah in Yemen on 29 September.

Front-month Ice Brent crude futures hit an intraday high of above $74.50/bl earlier, up by nearly $3/bl from yesterday's close.

Iran on 13 April launched more than 300 drones and missiles, marking its first ever direct attack of Israel from Iranian soil. Almost all those weapons were intercepted before they reached Israeli airspace, and no fatalities were reported by Israel.

The Middle East is the largest export region globally of urea and ships around 20mn t/yr, of which Iran accounts for about a quarter.

By Harry Minihan