Escalating tensions between Israel and Iran are more than news headlines; they pose very real risks to industries that depend on petroleum-based products—like resins, plastics, and petrochemicals. These materials are foundational to countless goods, from packaging to electronics, and a conflict in the Middle East can send ripple effects through global supply chains. Here’s a breakdown of how these disruptions show up—and what businesses can do to stay resilient.
Rising Oil Prices and Feedstock Inflation
When tension rises between Israel and Iran, oil markets respond swiftly. In prior flare-ups, crude prices have surged by 10 to 15 percent almost overnight. Since resins and plastics are derived from crude oil via feedstocks like ethylene, propylene, and naphtha, any increase in oil costs immediately affects raw material prices. That pressure is then passed to manufacturers who use those materials, squeezing margins and forcing reevaluation of costs and production schedules across the board.
Companies that rely heavily on petroleum feedstocks—such as plastic packaging providers, resin producers, and chemical integrators—often find themselves scrambling to recalculate budgets and secure supply contracts at less favorable rates. Planning for these cost fluctuations becomes essential to avoid surprises during project bids or long-term contracts.
Shipping Delays Through Strategic Chokepoints
The Strait of Hormuz is where global oil shipments often intersect with geopolitical tensions. With up to thirty percent of seaborne oil passing through that narrow waterway, even a threat to close it can force tankers to reroute around the Cape of Good Hope near Africa. That detour adds nearly two weeks to transit times and dramatically increases freight costs.
Even assuming space is available, carriers will adjust rates to cover additional fuel consumption, impose surcharges, or limit available transit slots. For the resin and plastics industry, delayed shipments can halt production lines, disrupt packaging timelines, and stall downstream operations in sectors ranging from consumer goods to medical devices.
Ripple Effects on Petrochemical Supply Hubs
Disruptions in oil or naphtha supply from the Middle East don’t occur in a vacuum. Regions like East Asia rely heavily on imported feedstocks to run their large petrochemical complexes. If supplies slow or cost spikes occur, those plants may reduce output or reserve material for higher-paying buyers. That limitation of available resin or plastic material elevates spot prices internationally.
Even manufacturers far removed from the Strait of Hormuz feel this squeeze. When Asian producers cut output, European or North American markets may face shortages, price hikes, or competitive scramble situations. Companies that lack sourcing flexibility can struggle to keep up, while those with diversified supplier networks have the upper hand.
Insurance and Freight Cost Surges
Heightened geopolitical risk isn’t just theoretical—it’s financially tangible. Freight insurance premiums spike when shipping through or near conflict zones, especially the Strait of Hormuz. Carriers may refuse to ship through these routes or charge significant war-risk surcharges. Those extra costs eventually land on business accounts.
Parallel disruptions can occur in logistics infrastructure. If transport lanes become unreliable, delays at offloading sites, rail yards, or port terminals aren’t uncommon. Increased dwell time at docks and limited berth space can cascade into larger network delays, further inflating costs and complicating delivery timelines.
Inflation and End-Product Pricing
End-consumer industries feel these disruptions acutely. Rising resin and plastic costs often translate into more expensive packaging materials, electronics housings, insulated components, and even automotive parts. Even minor cost shifts—just a few cents per pound or gallon—can significantly impact profitability at scale.
When companies operate on lean inventories or just-in-time production schedules, volatility in feedstock prices or delivery delays can force unplanned downtime, emergency sourcing, or non-optimal production adjustments. Those moves either shave margins or degrade service reliability—neither is sustainable in competitive sectors.
Impact on Downstream Industries
Industries from medical device manufacturers to food producers rely on plastics and resins for packaging and product components. Unscheduled price or delivery disruptions force these businesses to make difficult choices: absorb costs, renegotiate customer pricing, or reduce output. Long-term contracts may need adjustment, and consumer-facing brands risk disruption in shelves or product availability.
Even energy-intensive industrial producers—like automotive plants—depend on resilient plastic and resin supply chains. When resin availability tightens, manufacturing lines may run at partial capacity or shift to alternative materials, risking costlier inputs or conversion delays.
Building Supply Chain Resilience
Rather than waiting for crises to happen, companies should proactively build supply chain resilience. Start by assessing current risk exposure to Middle Eastern feedstocks. Identify alternate supplier routes in North America, Europe, or Latin America. Consider inventory buffering as a short-term solution—while longer-term contracts can secure feedstocks with predictable pricing.
Engaging logistics partners early can help identify alternate shipping routes and port options. Avoid relying on a single carrier or transit line, and plan for shift in vessel routing or extended transit times. Build flexibility into logistics plans so you can pivot quickly if conditions change.
Strategic Partnerships with Trade Experts
Working with a logistics partner who understands trade and geopolitical impact is critical. At Hawthorne Global Logistics, we help clients build resilience-driven strategies—from supplier diversification, route planning, logistics optimization, to feedstock contracting support. We can flag potential petroleum feedstock disruptions before they strike, and pivot logistics or sourcing accordingly.
When long-term stability is on the line, a drag-out crisis is no time for scrambling—with forethought and the right partner, your supply chain can withstand global turbulence while others face escalation fallout.
If your industry relies on petroleum-based products or petrochemical-derived materials, tightening your supply chain strategy now can shield your business from the next conflict-driven disruption. If you’d like help modeling supply exposure, identifying alternate sourcing, or building logistics resiliency, our team is ready to assist.
