The war involving Iran is sending shockwaves through global petrochemical markets, driving plastic and polymer prices to roughly four-year highs as supply routes are disrupted and costs surge across industries.
At the center of the crisis is the Strait of Hormuz, a key transit point for global energy and chemical flows. An estimated $20–$25 billion worth of petrochemical products pass through the strait annually, and ongoing disruptions have significantly tightened supply.
Analysts say the impact is widespread. “Anyone who imports from the Middle East… has lost a large supplier and is having to scramble to find replacement resin at extraordinarily higher prices,” said Joel Morales of Chemical Market Analytics.
Supply crunch pushes prices higher
Prices for widely used plastics such as polyethylene (PE) and polypropylene (PP)—essential in products ranging from car parts to toys—have surged since the conflict began.
Polyethylene prices have jumped nearly 37% on the Dalian Commodity Exchange since late February, while polypropylene prices have risen more than 38% over the same period.
The Middle East, which accounted for over 40% of global polyethylene exports in 2025, plays a crucial role in supplying markets worldwide. Disruptions in the region have left up to half of global polyethylene supply either offline or constrained, according to industry executives.
Asia and Europe face the biggest strain
The supply shock is hitting Asia and Europe particularly hard, as both regions rely heavily on imported petrochemical feedstocks.
Asia’s vulnerability is especially pronounced due to its dependence on naphtha, a crude-oil derivative used in plastics production. Refining margins for naphtha in the region have more than tripled since the conflict began, surpassing $400 per ton over Brent crude.
Countries such as Japan, South Korea and India are among the most exposed due to their reliance on imported crude and petrochemical inputs.
European producers are also under pressure, facing rising input costs and difficulties passing those increases on to customers.
U.S. gains cost advantage
In contrast, the United States is emerging as a relative winner. Its petrochemical sector benefits from abundant natural gas-based feedstocks, making production less dependent on crude-derived inputs like naphtha.
This advantage has allowed U.S. producers to maintain stronger margins, with some reporting “super-normal” profits as global prices rise.
Higher costs passed to consumers
Chemical companies worldwide have begun passing increased costs down the supply chain. Firms in the U.S., Europe and Asia have raised prices across a range of products, from plastics and additives to engineered materials.
The ripple effects are already reaching consumers. In India, the country’s largest bottled water company has raised prices by 11%, reflecting higher production costs.
