(Yicai) April 14 -- Multiple analysts at Independent Commodity Intelligence Services have warned that the Middle East conflict's disruptions to the global petrochemical supply chain have only just begun.

The war in the Middle East is dealing a far greater blow to the global petrochemical industry than any comparable event in the past, so even a permanent ceasefire will not prompt prices to return to pre-conflict levels in the short term, senior energy analysts at ICIS told Yicai.

Iran closed the Strait of Hormuz, through which about 20 percent of global oil flows, in late February after the United States and Israel began airstrikes on the Middle Eastern country, including energy infrastructure. As the parties failed to agree on ceasefire terms, US President Donald Trump said that it would impose a blockade on Iran from yesterday, which resulted in West Texas Intermediate crude oil prices rising 8 percent at market open.

The combined effect of the Middle East conflict and the closure of the Strait of Hormuz may surpass all historical precedents in terms of scope, scale, and breadth of commodities affected, said Zhou Ying.

"Compared with the two oil crises in the 1970s, today's global petrochemical capacity is far larger, supply chains are more integrated, and regional interdependence is tighter, so the supply gap and the range of affected products triggered by the disruption far exceed historical levels," she noted. “Asia has been hit especially hard.”

Daily vessel traffic through the Strait of Hormuz plunged about 95 percent to just six ships in March from around 130 in February, according to data from the United Nations Conference on Trade and Development.

Methanol prices across Asian markets soared between 68 percent and 141 percent in the first week of April from late February, with prices in some markets hitting a new record high, according to ICIS price assessments.

Polyethylene prices deserve as much attention as crude oil prices, according to Yu Ting. "The Middle East is one of the world's two largest polyethylene exporting regions, and the Strait of Hormuz is the primary shipping route of producers from Saudi Arabia, Qatar, Kuwait, and other regions," she said. “Alternative routes via Oman and other ports have emerged, but shipping costs are much higher.”

The conflict will accelerate a reshaping of the global chemical capacity and trade flows, while spurring rapid development for new energy-related industries, Yu predicted.

QatarEnergy's liquefied natural gas trains RasGas 2 Train 4 and RasGas 3 Train 6 were both damaged in the conflict, with official repair timelines estimated at three to five years, leaving the global market facing a sustained supply shortage of 12.8 million tons of LNG per year, said Xu Fei.

"Global natural gas fundamentals have shifted from an expected supply surplus to a state of tight balance, with prices more likely to gradually decline rather than snap back quickly to pre-conflict levels," Xu noted.

Even if the Middle East situation eases in the second quarter, and the Strait of Hormuz gradually resumes traffic, this year's average prices of crude oil and naphtha will remain much higher than last year's as supply-side facilities and production will take time to recover, according to Wang Yan.

More than 60 percent of Asia's naphtha imports, around 45 percent of its liquefied petroleum gas imports, and about 60 percent of its methanol imports pass through the Strait of Hormuz, said Zhou Xiaoyang.

Multiple Asian countries, including South Korea, Japan, Malaysia, and Vietnam, are facing direct energy supply shocks, Zhou Xiaoyang noted, adding that many of them have revised their petrochemical feedstock import plans, rushing to lock in long-term supply agreements outside the Middle East.

Asia's petrochemical producers have long relied heavily on single-source imports from the Middle East, a model that they may not continue, said Sun Lijia. The importance of alternative petrochemical feedstock sources, including the US, Russia, and Africa, will rise markedly.

"Even if costs are somewhat higher, their 'security premium' will be repriced," Sun noted, warning that the geopolitical risks weigh beyond the supply side.

"Sustained uncertainty will suppress downstream companies' willingness to restock and slow their investment pace, altering the timing of demand release," he pointed out. “This effect typically does not disappear when a conflict ends but shapes the operating logic of the global petrochemical industry for much longer.”

Editor: Futura Costaglione