Clean Fuels and Ammonia Markets Put in Focus Amid Hormuz Trade Risk

According to a recent LinkedIn post from Sightline Climate, commentary by team member Oliver Booth in Sustainable Views from the Financial Times discusses the relative resilience of clean fuels amid instability in the Strait of Hormuz. The post notes that the traditional green premium for most biofuels is narrowing as oil prices rise, with sustainable aviation fuel (SAF) highlighted as a notable exception due to pricing mechanisms linked to conventional jet fuel.

The post suggests that biofuels may face less disruption from Middle East shipping chokepoints than fossil fuels, citing that around 8 percent of U.K. transport already uses biofuels, largely derived from used cooking oil. It further argues that electrification should be prioritized where feasible, while biofuels focus on hard-to-abate sectors such as shipping and aviation, implying a more targeted role for these fuels within the broader energy transition.

According to the post, ammonia markets are also exposed, as a significant share of conventional ammonia used for synthetic fertilizers is produced from natural gas in the Middle East and shipped through the Strait of Hormuz. The commentary highlights the potential for ammonia produced via hydrogen and renewable electricity in other regions to gain traction, given that roughly 30 percent of conventional supply moves through this strategic corridor.

For investors, the post points to possible long-term demand support for biofuels and low-carbon ammonia as security-of-supply concerns and price volatility reshape energy trade flows. If the dynamics described gain momentum, Sightline Climate could be positioned to benefit from increased interest in analytics and insights related to clean-fuel markets, transition risk, and supply-chain resilience within the energy and agriculture value chains.