March 2026

Recently, the military conflict between the US and Iran has escalated, severely disrupting the strategic chokepoint of the Strait of Hormuz. This waterway carries approximately 20% of global seaborne oil trade and 25% of liquefied natural gas shipments, making it a critical node in the global supply chain currently impacted by the evolving situation.

Key Impacts on the Chemical Industry

Crude oil price volatility intensifies

The Brent crude oil futures price surged to $119 per barrel after the conflict broke out, reaching a new high since 2022. As the starting point of the petrochemical industry chain, fluctuations in crude oil prices will gradually be passed on to all downstream chemical products.

Key Chemical Raw Material Supply Risks

Methanol: Iran is China's largest source of methanol imports, accounting for approximately 70% of China's imported methanol. About 80% of these imports must be transported through the Strait of Hormuz

Sulfur: The Gulf region accounts for about 45% of global sulfur exports, and tight supply has driven up the costs of fertilizers and sulfuric acid

LPG/Naphtha: The Middle East is China's largest source of LPG and naphtha, while the cracking facilities in the eastern coastal regions, which rely on imports, face direct pressure

Logistics transportation is obstructed

The transit volume through the Strait of Hormuz has plummeted by approximately 97%, forcing ships to detour around the Cape of Good Hope. This has extended voyage durations, driven up freight rates, and ultimately increased the landed costs of imported goods.

Cost Transmission Timeline

There is a time lag in the price transmission from crude oil to end consumer goods, and the impact will continue to manifest over the coming months

2-4 weeks: Crude oil price increases transmit to chemical products

4-8 weeks: Rising chemical prices are passed on to downstream finished products

8-12 weeks: Price increases for finished products are reflected in end retail prices

Our Response and Recommendations

As a professional company specializing in chemical foreign trade, we recommend to our clients:

Short-term response

Monitor the inventory levels of high-risk products (methanol, ethylene glycol, LDPE) and appropriately increase safety stock

Confirm the order delivery date in advance and allocate buffer time for transportation

Maintain communication with us regarding alternative supply channels

Medium- to long-term planning

Geopolitical conflicts highlight the vulnerability of energy supply chains, and diversification of raw materials will become a trend

The cost advantages of alternative routes such as coal chemical industry are becoming evident, potentially ushering in development opportunities.