WPC 2026: Iran war prompts nations, companies to reconsider supply chain strategies: panel

This content is part of a series exploring key themes from the World Petrochemical Conference by S&P Global being held in Houston from March 23-27.

Global supply shocks caused by the war in Iran have prompted producers and governments to bolster the resilience of their supply chains, with restricted flows of ethylene, methanol, and other petrochemical feedstocks wreaking havoc on global derivatives pricing, S&P Global Energy CERA panelists said at the WPC on March 25.

The closure of the Strait of Hormuz has reduced crude oil flows out of the Persian Gulf from an estimated 21 million b/d to 2 million b/d, said Jim Burkhard, Global Head of Crude Oil Market Research for S&P Global Energy CERA, widening the spread between regional benchmarks.

Should the war persist, western benchmarks like Dated Brent or WTI will "gravitate more toward Asia" and Dubai pricing due to extreme supply pressures, Burkhard said, whereas an end to the conflict would cause Middle East benchmarks to "drift down" closer to those in the Atlantic Basin.

Over half of global refinery capacity has been impacted by the war, according to Kurt Barrow, Senior Vice President and Head of Oil, Fuel, and Chemicals Research at CERA.

"This is such a shock to the system for nations and companies," Barrow said, adding there is a "pendulum" between the need for more supply resilience and balancing earlier market conditions of oversupply.

After similar market shocks following the Russian invasion of Ukraine, the coronavirus pandemic, US tariffs in 2025, and now the war in Iran, governments and companies will look to reevaluate their strategies to balance supply chain resilience and energy security, Barrow said.

An estimated 12%-16% of ethylene capacity has also been impacted by the war in Iran, said Andrew Neale, Vice President and Global Head of Chemicals Research at CERA, with about 20% of methanol capacity also impacted.

The supply issues have continued to put bullish pressure on prices, despite falling slightly on March 25. Platts assessed the CFR Northeast Asia ethylene price at $1,400/mt, down $20/mt on the day but still $710/mt higher than a week ago.

For methanol, prices were similarly bullish as Platts assessed CFR China methanol $9/mt lower day over day at $378/mt, which was still $260/mt higher from a week ago.

The downstream effects of idled cracker and paraxylene production have "spread across Asia," Neale said, adding that with an estimated 10-11 million mt of PX lost, derivatives supply is sure to tighten quickly, "even when there is naphtha."

Greater demand for oil to keep in strategic reserves, particularly in Asia, could create "de facto demand," according to Burkhard, though that would not translate into actual consumption. This could keep prices high even after the war winds down, and that in turn would keep prices high for petrochemicals.

In addition, some alternative fuels, such as methanol, which were traditionally viewed in terms of lower carbon emissions, could also be considered for emerging markets experiencing conventional fuel shortages, Barrow said, adding there is "almost a dual incentive when you consider the energy security element."

Platts assessed Singapore low-carbon methanol bunkers at $1,035/mt on March 25, an increase of $5/mt from March 24. This rise was driven by higher bunker fuel prices and increased transportation costs associated with shipping low-carbon methanol from China to Singapore.

Platts is part of S&P Global Energy.