One Month of Iran Conflict Cuts 20% of Global Oil & Gas, Sparks Widespread ‘Everything Shortage’ Across Asia’s Plastics and Medical Supply Chains
SINGAPORE, April 5 (VGMG) — One month after hostilities erupted between Iran and a US-Israeli coalition, the effective blockade of the Strait of Hormuz has slashed roughly one-fifth of the world’s oil and natural gas supplies. What began as an energy price shock is now rapidly evolving into a full-blown supply chain crisis characterized by physical shortages of plastic packaging, medical consumables and everyday consumer goods across Asia. According to analysis from CNN, the crisis has moved beyond soaring energy prices to become a “can’t-buy” supply crunch, with naphtha — a critical petrochemical feedstock for plastics, rubber and polyester — at the heart of the bottleneck. Unlike crude oil, naphtha has minimal global stockpiles and no viable substitutes, making the current supply disruption uniquely difficult to remedy.
The war erupted on February 28, 2026, when the United States and Israel launched strikes against Iran. Tehran retaliated with attacks across the region and effectively closed the Strait of Hormuz to commercial shipping. Since March 1, a total of 27 commercial vessels, including 13 oil tankers, have been attacked or reported incidents in the Gulf, the Strait of Hormuz or the Gulf of Oman, according to the British marine security agency UKMTO. At least 11 seafarers or dock workers have been killed in the region since the conflict began, according to the International Maritime Organization.
Maritime intelligence firm Kpler reports that just a handful of vessels are crossing the strait daily. Since March 1, commodities carriers have made only 225 crossings — a 94 percent decrease from peacetime levels, when the channel saw approximately 120 daily transits. Iranian Foreign Minister Abbas Araghchi has warned the United Nations Security Council against any “provocative action,” stating that such moves would “only complicate the situation”. A scheduled Security Council vote on a draft resolution authorizing defensive force to protect shipping in the strait has been postponed indefinitely, with Russia, China and France having objected to earlier drafts.
The Naphtha Crisis at the Core
The blockage of the Strait of Hormuz has created an acute shortage of naphtha, a petroleum byproduct used as the primary feedstock for plastics, synthetic fibers, industrial chemicals and a wide range of downstream products. The Gulf region normally supplies approximately 60 percent of Asia’s naphtha imports, or about four million metric tons per month, while Russia fulfills roughly 14 percent of Asia’s import needs at one to 1.2 million metric tons.
Preliminary data from Kpler shows that Middle East naphtha deliveries to Asia in March fell by approximately 85 percent, plunging to about 583,000 metric tons from a monthly average of four million. LSEG ship-tracking data pegged March arrivals at around 557,000 metric tons, and April deliveries are expected to fall even further.
The supply shock has sent prices soaring. Benchmark prices for first-half May cargoes soared to approximately $1,300 per metric ton, nearly double pre-war levels, while naphtha prices in Singapore breached the psychological $1,000 per metric ton mark in late March — a level not seen in years, representing a roughly 60 percent increase from levels just one month earlier. The rush to source naphtha sent the prompt-month spread to a record $137 per metric ton in backwardation, meaning prompt prices are significantly higher than those for future months, according to LSEG data. A Japanese buyer recently paid a premium of more than $100 per metric ton for second-half April naphtha, compared to a small discount in January.
Adding to the squeeze, the International Energy Agency (IEA) estimates that approximately 70,000 barrels per day of naphtha is being diverted from regular use to serve as an alternative petrochemical feedstock amid liquefied petroleum gas shortages, further tightening global availability. Ukrainian strikes on Russian energy infrastructure have also impacted Russian exports, with shipments to Asia in March expected to plummet to approximately 400,000 metric tons, down from a monthly average of one to 1.2 million metric tons, according to LSEG ship-tracking data and Russian traders.
Asia’s Manufacturing Heartland Bears the Brunt
Asia, which accounts for half of global manufacturing output, is at the center of the disruption. Many countries in the region rely heavily on imported oil and petrochemicals, leaving them particularly exposed. The shortage of plastic resins is now disrupting production of items ranging from packaging materials and textiles to medical equipment and automotive components, with early signs of stress emerging across multiple sectors.
The impact on Northeast Asian petrochemical plants has been severe. According to Rystad Energy, cracker utilization rates in Northeast Asia fell to 60 percent in March from approximately 80 percent in February, primarily due to naphtha import dependence and limited integration between refineries and petrochemical units. Senior Vice President Manish Sejwal expects further run cuts of five to seven percentage points in April, noting that “with less access to captive supply, operators have had little choice but to cut runs”. About five percent of global ethylene capacity has already been shut in Japan, South Korea and China due to a lack of feedstock, according to JPMorgan analysts.
A South Korean plastic-film manufacturer reported that some inputs jumped up to 50 percent while others simply disappeared, forcing output down to approximately 20 to 30 percent of normal levels as inventories ran dry. Yeochun NCC, South Korea’s largest ethylene producer, said the company is “running at the lowest run rate (as) it became very hard to secure naphtha spot supply no matter the price”. The company declared force majeure on March 4, notifying customers of delays in ethylene supply. Lotte Chemical, LG Chem and Hanwha Solutions have also warned clients of the possibility of force majeure.
Prices of key polymers have surged dramatically. Data from ICIS shows that since the first US-Israeli airstrikes on Iran on February 28, Asian plastic resin prices have risen by as much as 59 percent, reaching record highs. In India, high-density polyethylene prices rose from approximately ₹1,452 per metric ton on February 28 to more than ₹2.47 lakh by March 15, a 60.6 percent increase. Linear low-density polyethylene rose 66 percent, polypropylene surged 70 percent, and polyvinyl chloride increased 34.8 percent. According to industry sources, thousands of micro, small and medium enterprises across India are struggling to sustain operations, with more than 50 percent of small processing units having suspended production. The All India Plastics Manufacturers Association has urged the government to intervene.
Plastic packaging shortages are also affecting food manufacturing and restaurant sectors across Asia. South Korean instant noodle manufacturer Nongshim reported that it has just two to three months of packaging stock remaining, while Samyang Foods warned that packaging for its Buldak ramen could be squeezed. In Japan, Yamayoshi Seika paused production of a snack after failing to source heavy oil for boilers. Some restaurant operators in South Korea have already been notified by suppliers of delivery delays, reduced volumes and price increases for polypropylene-based takeout and delivery containers. Rising logistics friction and margin pressure are building across the value chain as the crisis drags on, with analysts noting that volatility in oil prices has led many buyers to slow down commitments and wait for clearer pricing direction.
Medical Supply Chains Under Threat
The shortage of plastic feedstocks is now threatening critical medical supplies across Asia. Japan’s medical community is particularly concerned. The Asahi Shimbun editorial board warned in early April that disposable plastic products derived from naphtha — including surgical materials, syringes, catheters and dialysis circuits — are at risk of shortage, and that insufficient supplies could endanger the lives of patients receiving treatment for serious illnesses. Hodanren, a Japanese federation of doctors and dentists, urged the government last week to take steps to ensure stable supplies of medical products such as syringes and catheters, stating that “if supplies become tight, it will directly impact patients’ lives and health”. Japanese Prime Minister Sanae Takaichi responded by assuring the public that there would be “no immediate disruption to supply,” while acknowledging that crude oil shortages in other Asian nations had led to worries about the long-term supply of products manufactured elsewhere and shipped to Japan.
In Malaysia, the world’s largest producer of medical gloves, the Strait of Hormuz blockade has disrupted naphtha flows from the Middle East, constraining the supply of nitrile butadiene rubber (NBR), a key raw material used in medical glove production. Several petrochemical producers across South Korea, China, Taiwan, Japan have either reduced operating rates, temporarily shut down plants or declared force majeure. Hong Leong Investment Bank estimates that a 37 percent reduction in global naphtha supply could proportionally cut nitrile glove capacity, lowering annual output to approximately 384 billion pieces while global demand remains roughly 341 billion pieces. The analyst noted that smaller players are more exposed due to concentrated supply chains and rising prepayment requirements of 20 to 30 percent, which may strain working capital in a low-margin environment. The bank suggested that larger glove manufacturers are likely to benefit from this development at the expense of smaller players, potentially accelerating industry consolidation and forcing some to exit the market permanently.
Government Responses Across Asia
Governments across the region have scrambled to respond to the unfolding crisis. South Korea, which relies on overseas supplies for approximately 45 percent of its naphtha demand with about three-quarters sourced from the Middle East, has imposed an immediate ban on exports of naphtha. The measure, which took effect March 27 and will initially remain in place for five months, redirects all locally produced naphtha to domestic buyers, including volumes already committed under export contracts. Authorities have also designated naphtha as an item for economic security and are providing financial support to affected firms, including low-interest funding. The industry ministry said 27,000 metric tons of Russian naphtha would arrive on March 30, the first such cargoes since an import halt in late 2022 prompted by Moscow’s invasion of Ukraine. Calls are growing for the government to permit further imports of naphtha from Russia, with industry officials viewing Russian naphtha as the only viable alternative to Middle Eastern supplies. Data from the Korea International Trade Association shows that Russian naphtha accounted for nearly 30 percent of Korea’s total imports before Western sanctions halted imports.
The shortage of plastic raw materials has already reached South Korean consumers. In a country where residents must purchase government-designated plastic bags for waste disposal — with violations incurring significant fines — panic buying has emptied shelves across Seoul, Busan and Daegu. Some retailers have imposed purchase limits, and social media has shown plastic bags being offered as promotional gifts alongside instant noodles and snacks — an unusual marketing tactic that reflects the scarcity. South Korean Environment Minister Kim Sung-hwan has assured the public that more than half of local governments have sufficient garbage bag inventory to last six months, and that in the worst case, residents would be allowed to use ordinary plastic bags. The government also noted that recycled materials held by recycling companies could produce approximately 1.83 billion garbage bags, exceeding the 1.78 billion sold nationwide in the previous year — meaning that even if raw material supply were completely cut off, production could continue for more than a year.
In Taiwan, China, authorities have activated a dedicated hotline (02-27011669 extensions 105 through 107) to assist manufacturers crippled by plastic resin shortages. The mechanism provides a comprehensive service from demand registration, preliminary assessment, inventory analysis, supplier matching to case closure and follow-up, helping manufacturers secure raw material sources and stabilize production lines. Yunlin County has conducted joint inspections with prosecutors, police and investigators to monitor market conditions and prevent hoarding or price gouging, with authorities promising a zero-tolerance approach to any behavior that disrupts market order.
China, which produces close to half of the world’s synthetic rubber, is expected to see output fall by approximately one-third in April, tightening supplies for tires and medical gloves. South Korea is reportedly considering expanding export restrictions beyond naphtha to include petrochemical products such as ethylene and synthetic resins, a move that would further tighten regional supply.
Logistics and Shipping Disruptions Compound the Crisis
The logistics of global trade have been severely disrupted by the conflict. Major container shipping companies including MSC, Maersk and Hapag-Lloyd have suspended routes through the Gulf region. According to Xeneta data, approximately 500,000 TEUs — representing hundreds of container ships — are currently stranded in the Persian Gulf. To maintain supply chains, many vessels have been forced to reroute around the Cape of Good Hope, adding 10 to 14 days to transit times and significantly increasing fuel and insurance costs for global trade. The number of vessels diverting to the Cape of Good Hope has surged 112 percent year-on-year.
Marine fuel prices at the world’s top 20 ports have nearly doubled, with high-sulfur fuel reaching record highs and low-sulfur fuel prices approaching peak levels seen during the Russia-Ukraine conflict. The detour has directly pushed up basic freight rates by 15 to 20 percent. War risk insurance premiums have soared twelvefold, with rates rising from 0.25 percent to 3 percent. For a very large oil tanker, the insurance premium for a single passage through the Strait of Hormuz can reach up to one million dollars. Major shipping lines have introduced emergency war risk surcharges of $1,500 to $4,000 per container for cargo to and from the Middle East.
Wider Economic Implications and Outlook
The crisis is now feeding directly into consumer markets. The price spread between virgin and recycled polyethylene terephthalate (PET) has narrowed to approximately $200 per metric ton, down from over $400 per metric ton in previous years, as recyclers report a surge in demand for recycled plastic amid supply constraints. Rob Kaplan, chief executive of Circulate Capital, which invests in recycling firms in South and Southeast Asia, said his portfolio companies have seen a “huge” increase in demand for recycled plastic. “It’s not just about pricing, it’s availability,” Kaplan said. “With oil prices going up and choke points reducing access to the building blocks for virgin plastic, there has been a significant increase in demand for recycled plastic”.
Prices of everyday items are rising across the region. In India, bottled water prices have already increased due to rising costs of plastic bottles and caps. A Thai plastic packaging wholesaler reported that transparent cellophane bags commonly used by restaurants and takeaway food vendors have increased 10 percent in price, while Indian media have reported that the price of plastic bottle caps has tripled since the war began. Chinese exporters have raised export prices on goods ranging from toys to medical catheters.
The crisis is also affecting sectors beyond plastics. India’s plastic-processing industry, which comprises approximately 50,000 enterprises — 85 percent of which are micro, small and medium enterprises — provides direct employment to about five million people and contributes approximately $12.5 billion in exports. Industry leaders report that production has become unviable at many units. Sangram Das, president of the Odisha Plastic Pipes Manufacturers Association, said over 75 percent of operational units in the state had stopped production. “Production has become unviable. Even if we want to run our units, raw material is either unavailable or priced beyond our capacity,” Das said. Larger manufacturers are also under stress, with production dropping 50 to 70 percent in bigger units.
Consultancy Wood Mackenzie, which is monitoring the situation daily, noted in a base case scenario analysis that if the disruption extended beyond four weeks, the situation would transform from manageable to crisis. GCC producers would be forced to sharply cut operating rates as tank storage reaches capacity with no export outlet, while Asian buyers would face multi-million-tonne supply deficits and panic buying. Even under optimistic assumptions where global exporters maximize shipments, Rystad Energy estimates that replacement supplies could cover only approximately 55 to 65 percent of lost volumes. Restarting petrochemical plants after a shutdown can take two weeks or more, further complicating any rapid return to normal operations.
Dan Martin, head of business intelligence at Dezan Shira & Associates, told VGMG that the ripple effects are spreading quickly to end products. “This will soon hit beer, noodles, toys and cosmetics — plastic caps, crates and packaging are already hard to find across Southeast Asia and Northeast Asia,” Martin said. Even if the Strait of Hormuz were to reopen tomorrow, analysts warn that Asia’s plastic industry would still require months to return to anything approaching normal operations. With no resolution to the conflict in sight and shipping through the strait remaining virtually paralyzed, the crisis is poised to deepen further in the coming weeks, threatening the viability of Asia’s export-dependent manufacturing base and reshaping global trade flows and production patterns for months to come.