Middle East Chemicals Keep Their Cost Edge Despite Hormuz Crisis
Offers Another 17 Million SPR Barrels as Fuel Crisis Deepens What I Cover Tsvetana Paraskova is an energy and commodities journalist who has contributed to Oilprice.com for nearly a decade, covering global energy markets, commodities,… Despite the Iran war and the Hormuz crisis, the Middle East’s low-cost chemicals production is set to retain its long-term advantage over other regions.
Near-term shifts in the sourcing of polymers are taking place due to the current constraints in the Persian Gulf’s industrial base, benefiting U.S.
But in the long run, the Middle East is likely to retain its buyers’ base because it still has the two levers to be competitive on the global market—an extensive production base and, most of all, low-cost production with abundant naphtha supply, industry analysts and executives tellReuters.
Many buyers have moved to diversify their polymer supply due to the Middle East crisis and the fewer volumes they have received through the Strait of Hormuz since the Iran war began at the end of February.
But many customers see the diversification as protection against the current crisis, not a replacement in the long run, as the low prices of the Middle East’s polymers trump risks to supply for most.
Thus, the cost advantage of the Middle East remains a key driver despite the Hormuz crisis.Related: Global Gas Crunch Makes Europe’s Remaining Coal Plants Profitable Buyers continue to base their purchasing decisions on price, Morningstar analyst Christian Flemming told Reuters.
Even as supply disruptions have prompted diversification, the current bottlenecks in the Middle East are unlikely to reduce the long-term importance and advantage of the Gulf producers in the polymer markets, a spokesperson for chemicals giant BASF told the publication.
The Middle East is the world’s biggest exporter of polyethylene, the most used plastic globally.
Exports of polyethylene from the Middle East accounted for43% of allglobal exports of the polymer last year, data from the International Trader Publications showed earlier this year.
The Middle East exported 18.7 million tons out of total global exports of 43.8 million tons in 2025.
North America was the second-largest polyethylene exporter last year with 15.6 million tons.
Because of secure feedstocks and ample supply, North America is set to fill some of the supply gap amid the Hormuz crisis, according to International Trader Publications.
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