{"id":409424,"date":"2026-03-29T03:22:16","date_gmt":"2026-03-29T03:22:16","guid":{"rendered":"https:\/\/www.europesays.com\/ie\/409424\/"},"modified":"2026-03-29T03:22:16","modified_gmt":"2026-03-29T03:22:16","slug":"why-iran-war-should-make-you-as-afraid-of-petrochemicals-as-oil-prices","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/ie\/409424\/","title":{"rendered":"Why Iran war should make you as afraid of petrochemicals as oil prices"},"content":{"rendered":"

Jeff Greenberg | Universal Images Group | Getty Images<\/p>\n

The price of naphtha may not keep you up at night when you think about the inflation<\/a> yet to hit the economy from the U.S.-Iran war<\/a> and Strait of Hormuz<\/a> closure, but\u00a0perhaps it\u00a0should.\u00a0<\/p>\n

As gas prices<\/a> continue to rise alongside crude oil<\/a>, costs of petroleum derivatives \u2014 petrochemicals \u2014 are also rising, and that eventually may have a far wider impact<\/a> on consumers than gas prices.\u00a0<\/p>\n

The cauldron of petrochemicals sounds like a high school chemistry class study guide: benzene, butadiene, ammonia, styrene, naphtha and many other oil-based byproducts. Known as feedstocks in industry parlance, they go into everything in your life, from hospital gloves<\/a> to pasta packaging. And the costs of these chemicals are rising even if consumers won’t\u00a0notice for a while.\u00a0<\/p>\n

But Stanislav\u00a0Krykun, CEO of DST-Pack, a Poland-based packaging company,\u00a0is already seeing it on the factory floor.\u00a0“Our plastic suppliers in China have raised prices by roughly 15% recently, and they’ve pointed to higher raw material costs and general market uncertainty as the reason,”\u00a0Krykun\u00a0said.\u00a0<\/p>\n

Krykun’s\u00a0factory produces packaging for companies all over the world, including the U.S., and he can see now what consumers will see later: increased prices. \u00a0<\/p>\n

Most people\u00a0aren’t\u00a0focused on Advent calendars right now \u2014 those chocolates hidden under perforated punch-outs to celebrate each day of the season. But\u00a0Krykun\u00a0is thinking about it.\u00a0<\/p>\n

Orders are already ramping up for the 2026 Christmas holiday season, and these calendars often include molded plastic trays inside, and these are going to get more expensive.\u00a0<\/p>\n

“We’re currently working with dozens of clients on Advent calendar production, many of whom are at the sampling or early production stage. Due to recent developments,\u00a0we’ve\u00a0had to recalculate costs for many of these projects specifically because of the increase in plastic prices, which directly\u00a0impacts\u00a0the cost of these inserts,”\u00a0Krykun\u00a0said.\u00a0<\/p>\n

One key thing to understand is that the impact of these price increases is not immediate.\u00a0“It’s quite gradual,”\u00a0Krykun\u00a0said.\u00a0Companies that had already confirmed production and locked in pricing for upcoming shipments were still able to\u00a0proceed\u00a0at\u00a0previous\u00a0cost levels. “However, all new orders placed over the past couple of weeks are already being quoted at higher prices,”\u00a0Krykun\u00a0said.\u00a0<\/p>\n

“Packaging needs to be produced, shipped to the manufacturer, filled with\u00a0product, and only then distributed to retail.\u00a0So\u00a0any price changes typically become visible on shelves with some lag rather than instantly,”\u00a0Krykun\u00a0added.\u00a0<\/p>\n

Trillions of dollars in everyday goods will be impacted<\/p>\n

When the lag wears off, the impact will be felt pretty much everywhere and in everything.\u00a0<\/p>\n

“The uses of petrochemicals are wide-ranging and, essentially, impact everything we use and consume. It would be hard to\u00a0identify\u00a0something that\u00a0didn’t\u00a0have an oil or natural gas-based\u00a0component\u00a0unless it was constructed entirely of wood,” said Tom Seng, assistant professor of professional practice in energy finance at Texas Christian University’s Ralph Lowe Energy Institute.\u00a0“The amount of plastic used in auto and truck manufacturing alone is huge,” he added.<\/p>\n

Of the 193 active petrochemical complexes in the Middle East, about 79% are in just Saudi Arabia,\u00a0Iran\u00a0and Qatar, with Saudi Arabia alone\u00a0representing\u00a075% of production capacity.\u00a0<\/p>\n

He added that the Gulf Cooperation Council States \u2014 Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the U.A.E. \u2014 collectively produce about 12% of the world’s petrochemicals, or 150 million tons per year.\u00a0<\/p>\n

All of\u00a0those petrochemicals are\u00a0almost solely\u00a0dependent on the Strait of Hormuz for shipping their product.\u00a0<\/p>\n

“There are so many of these everyday goods that will be impacted,” said Jeff Krimmel, founder of energy consultancy Krimmel Strategy Group.\u00a0<\/p>\n

Krimmel said that petrochemical shortages and price increases will find their way into textiles, detergents, food, and beverages.\u00a0<\/p>\n

“So much of the world is packaged and transported in various forms of plastic,” Krimmel said.\u00a0<\/p>\n

\"What<\/p>\n

All of those plastics come from feedstocks that have their origin in oil, like naphtha, propylene, methanol, ammonia, and styrene.\u00a0While there are some byproducts available elsewhere, the Middle East oilfields are the top source for\u00a0naphtha\u00a0and there is no substitute for that.\u00a0<\/p>\n

“Naphtha is really\u00a0important,\u00a0it is\u00a0a richer, more liquid-based feedstock\u00a0with\u00a0a\u00a0slate\u00a0of outputs that cascade across the economy,” Krimmel said.\u00a0<\/p>\n

Even if combat ceased\u00a0immediately, it\u00a0will\u00a0take time to\u00a0normalize the supply and demand on\u00a0the back end. The longer hostilities last, the more the issues will accumulate. So, there is no consumer who should be\u00a0breathing a sigh of relief any time soon, Krimmel said.\u00a0<\/p>\n

More consumer price inflation, more lower-income stress<\/p>\n

Atsi\u00a0Sheth, chief credit officer at Moody’s Ratings, said this is only the most recent shock for a petrochemical industry that has seen several in recent years, from Covid to Ukraine to the Red Sea issues and now the Strait of Hormuz. She said the biggest shock, though, was China increasing its output of petrochemicals, and that global oil companies, sensing vertical integration opportunities, started producing more.\u00a0<\/p>\n

“Moody’s has been calling out that there is a supply shock \u2014 too much supply, not enough demand,” Sheth said.\u00a0Because of that, Moody’s has taken\u00a0a number of\u00a0downward\u00a0ratings actions\u00a0against producers, because the oversupply eats away at margins and the capacity to pay debt is eroding.\u00a0But once current stocks are depleted, the shock will swing rapidly in the other direction, she said, and the expectation is that inflation ramps up as the year progresses.<\/p>\n

“The inference we are making is that this will ultimately\u00a0feed into\u00a0consumer price inflation. Food, clothing, and other retail goods will hit those at the lower end of the income scale,” Sheth said.\u00a0<\/p>\n

Peter Swartz, chief science officer and co-founder of supply chain analytics company Altana, said that the market is now pricing in uncertainty and that the long-term effects will include price increases no matter what happens on the battlefield.\u00a0“The long-term effect is here. Every business is now\u00a0planning for\u00a0a more uncertain future and investing in diversification, and that is cost-additive,” Swartz said.\u00a0<\/p>\n

There is a multiplier effect that follows a jolt to the petrochemical market like the one happening now, because petrochemical products go into tens of trillions of dollars of goods that then go into tens of trillions of other goods \u2014 all relying on the same petrochemical soup.\u00a0“There is no magical easy substitution for these products,” Swartz said.\u00a0<\/p>\n

Altana data shows that raw feedstocks\u00a0comprising\u00a0$733 billion\u00a0in petrochemicals, intermediates, and finished products combined \u2014 22% of the world’s total supply including ethylene, propylene, butadiene, benzene, toluene, xylenes, methanol, glycol, MTBE, epoxides, acetic acid, acrylic acid, PTA, acrylonitrile, and melamine\u00a0 \u2014 flow through the Gulf. This has a downstream impact on\u00a0$3.8 trillion\u00a0in goods, from toothpaste to towels.\u00a0<\/p>\n

Meanwhile,\u00a0Krykun\u00a0watches order volatility for his plastic packaging with alarm, and, at the very least, customers will notice less packaging but not less price.\u00a0“We’re seeing brands make very practical adjustments,” he said. For example, a skincare brand may move from a more complex box structure to a simpler one. A phone accessories brand may reduce internal packaging components or redesign the structure to use less material.\u00a0<\/p>\n

“Even for products like boxed chocolates, brands are simplifying internal layouts or overall construction to manage costs,”\u00a0Krykun\u00a0said.\u00a0<\/p>\n

But time is not on the producers’ side.\u00a0<\/p>\n

“Reducing packaging complexity or redesigning structures is not an immediate process \u2014 it often requires\u00a0development\u00a0work, testing, and approval cycles that can take weeks or months,”\u00a0Krykun\u00a0said.\u00a0<\/p>\n

In many cases, brands simply do not have enough time to fully redesign packaging before their next production\u00a0run. As a result, they are often forced to place the next bulk order at higher prices while simultaneously working on alternative, more cost-efficient packaging solutions in parallel.\u00a0<\/p>\n

\"ConsumerChoose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Jeff Greenberg | Universal Images Group | Getty Images The price of naphtha may not keep you up…\n","protected":false},"author":2,"featured_media":409425,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[174],"tags":[170283,170269,170274,184530,184529,4055,7033,79,207,184527,381,184524,184525,179,18,19,185,18929,17,184523,59927,2120,15112,184528,16231,4367,184526,6613,22254],"class_list":["post-409424","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-lco26k","tag-lco26q","tag-ng26j","tag-ng26k","tag-amcor-plc","tag-asia-economy","tag-breaking-news-economy","tag-business","tag-business-news","tag-celanese-corp","tag-china","tag-dow-inc","tag-eastman-chemical-co","tag-economy","tag-eire","tag-ie","tag-inflation","tag-iran","tag-ireland","tag-lyondellbasell-industries-nv","tag-moodys-corp","tag-qatar","tag-saudi-arabia","tag-sealed-air-corp","tag-suppress-zephr","tag-u-s-economy","tag-westlake-chemical-partners-lp","tag-world-economy","tag-wti-crude-sep25"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@ie\/116310320426721493","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/409424","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/comments?post=409424"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/409424\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media\/409425"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media?parent=409424"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/categories?post=409424"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/tags?post=409424"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}