Shipping disruptions through the Strait of Hormuz have left nearly 20% of global ethylene capacity offline and affected as much as 40% of Asia's naphtha supply, tightening petrochemical markets and driving prices higher. Reuters reported on October 15 that restrictions on shipments from the Middle East, following U.S. and Israeli military strikes on Iran in late February, had forced chemical producers and buyers to adjust operations and sourcing arrangements. The figures, cited from S&P Global Market Intelligence, show the scale of the disruption to global petrochemical supply.
The Middle East accounted for more than 40% of global polyethylene exports in 2025, supplying customers across Asia, Europe and Latin America. Saudi Arabia, the United Arab Emirates and Qatar remain among the industry's lowest-cost producers, supported by access to competitively priced hydrocarbon feedstocks and large integrated manufacturing complexes. Those advantages have helped Gulf suppliers retain much of their international business despite shipping interruptions and uncertainty over cargo deliveries.
Some buyers have nevertheless begun spreading their orders across more suppliers. Brett Massimino, an associate professor of supply chain and analytics at Virginia Commonwealth University, said domestic and regional suppliers had captured roughly 20% of demand, up from almost negligible levels before the conflict. Some North American and European petrochemical producers have also increased ethylene cracker operating rates to meet additional demand. Gulf producers, however, have retained most of their existing business, with pricing remaining a major factor in purchasing decisions.
The supply squeeze has given chemical producers more room to raise prices. Dow Chief Financial Officer Jeff Tate said in July that polyethylene prices had risen more than 40% since late February. Eastman Chemical reported second-quarter revenue growth of approximately 10%, with a 5% contribution from higher volumes and product mix and a 4% increase in selling prices. The company said higher prices for chemical intermediates were primarily driven by tighter market conditions linked to the Middle East conflict. German specialty chemicals producer Wacker Chemie said it had secured its raw material requirements and passed some additional costs on to customers.
BASF told Reuters that the disruptions had reinforced the need for supply chain diversification, although the Middle East's production scale and cost advantages would continue to support its position in global chemical markets. Morningstar analyst Seth Goldstein said North American producers could benefit from additional demand in the near term, but buyers were unlikely to abandon Middle Eastern suppliers permanently. BASF said it remained uncertain whether purchasing patterns would fully return to their previous levels.
