{"id":38290,"date":"2026-03-27T07:54:07","date_gmt":"2026-03-27T07:54:07","guid":{"rendered":"https:\/\/www.europesays.com\/iran\/38290\/"},"modified":"2026-03-27T07:54:07","modified_gmt":"2026-03-27T07:54:07","slug":"dow-ceo-warns-petrochemical-shortage-from-iran-war-could-fuel-inflation-for-rest-of-the-year","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/iran\/38290\/","title":{"rendered":"Dow CEO warns petrochemical shortage from Iran war could fuel inflation for rest of the year"},"content":{"rendered":"

Petrochemical price spikes and shortages from the Iran war likely will cause inflationary effects at least through the end of the year on construction materials, consumer goods, the automative and aerospace industries, and much more, the CEO of Dow<\/a> chemical said.<\/p>\n

While much of the global supply shock focus is on oil<\/a>, natural gas<\/a>, fertilizer, and even helium for semiconductors, almost 20% of the global petrochemical capacity is blocked from the effective closure of the Strait of Hormuz chokepoint by Iran, said Dow chairman and CEO Jim Fitterling.<\/p>\n

\u201cThe die is being cast for the rest of the year for what\u2019s going to happen in the markets,\u201d Fitterling said at the CERAWeek by S&P Global conference in Houston. \u201cIt\u2019s like the unwind we saw on supply chains during COVID.<\/p>\n

\u201cYou could be in the 250- to 275-day [range]. This is not going to be an instantaneous rewind.\u201d<\/p>\n

The supply shock will not only exacerbate<\/a> the so-called K-shaped economic trends, he said, but also create greater haves and have nots between the Western and Eastern hemispheres.<\/p>\n

Commodity petrochemical plants in the West\u2014led by the U.S.\u2014largely rely on natural gas-derived ethane as the chief feedstock, which is not directly affected by the war. In Asia, and much of Europe, they use crude oil-based naphtha as the building block. And almost half of Asia\u2019s naphtha supplies flow through the Strait of Hormuz, Fitterling noted.<\/p>\n

Already, many Asian plants are declaring force majeure and drastically cutting production because they can\u2019t get the naphtha, said Kurt Barrow, S&P Global Energy vice president for oil, fuels and chemicals research.<\/p>\n

\u201cWe\u2019re seeing the force majeure of plants in Asia, but we\u2019re not yet seeing the shortages at Home Depot<\/a>,\u201d Barrow told Fortune. \u201cBut there is that potential. Chemicals go into everything.\u201d<\/p>\n

How the supply chains unfold<\/p>\n

While 150 vessels typically flowed through the Strait of Hormuz each day, Fitterling estimates only about 15 escorted ships will initially proceed daily \u00a0when the strait is eventually reopened.<\/p>\n

The process will start by prioritizing oil and gas\u2014more than 300 of the roughly 430 stranded vessels are oil tankers\u2014and then likely give secondary priority to fertilizer for agriculture and food supplies.<\/p>\n

\u201cPetrochemicals will be somewhere down the list,\u201d Fitterling said, and those ships take four-week trips to Asia. \u201cYou have to clear the supply chain out of the Arabian Gulf.\u201d<\/p>\n

That\u2019s why the base commodity petrochemical pricing arbitrage between the U.S. and Asia\u2014typically less than $500 per metric ton\u2014has shot up above $1,200, he said. Prices will still rise everywhere.<\/p>\n

\u201cWe have to navigate a two-speed economy; we have to navigate massive geopolitical disruption,\u201d Fitterling said. \u201cThe volatility is off the charts right now.\u201d<\/p>\n

On the surface, this is good news for U.S. petrochemical producers. Much of Dow\u2019s growth in recent years is in Texas, Louisiana, and Canada. But Dow, like many other top petrochemical players, is diversified and Dow has major operations in Asia, including large joint ventures in Saudi Arabia.<\/p>\n

The petrochemical sector has suffered an industry-wide downturn in recent years, and, in late January, Dow (No. 103 on the Fortune 500) announced a \u201ctransform to outperform\u201d plan that aims for $2 billion in savings, including 4,500 layoffs.<\/p>\n

Starting with a small industry uptick earlier this year, the Dow announcement, and now a surge from the Iran war, Dow\u2019s stock is up nearly 70% year to date.<\/p>\n

But Fitterling isn\u2019t celebrating. He\u2019s bemoaning the volatility.<\/p>\n

\u00a0For instance, he said he was hoping that relatively lower interest rates this year \u201cwould stimulate more housing demand,\u201d but the \u201cinflationary impact\u201d of this Iran war could lead to rising interest rates again and less economic growth.<\/p>\n

In the U.S., petrochemical plants will run at full capacity to aid market demand and capture higher profit margins, Barrow said.<\/p>\n

\u201cThe U.S. is in a really advantageous position,\u201d Barrow said. \u201cThose [ethane] crackers are running as hard as they can to supply the market, but the reality is there\u2019s not enough spare capacity in the world to make up that gap.<\/p>\n

\u201cWe\u2019re going to have the haves and have nots.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Petrochemical price spikes and shortages from the Iran war likely will cause inflationary effects at least through the…\n","protected":false},"author":2,"featured_media":38291,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[16768,38,2613,34],"class_list":{"0":"post-38290","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-iran","8":"tag-chemicals","9":"tag-donald-trump","10":"tag-dow","11":"tag-iran"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@iran\/116300065234026285","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/posts\/38290","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/comments?post=38290"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/posts\/38290\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/media\/38291"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/media?parent=38290"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/categories?post=38290"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/tags?post=38290"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}