A potential surge in oil prices to $140–150/barrel could trigger demand destruction, volatility and disruption across global chemical markets.
- Further delays to reopening of Strait of Hormuz could see oil prices rise to $140–150/bbl
- Higher oil would drive panic buying then sharp demand destruction as downstream customers cannot absorb costs
- Markets are already “extremely cautious and hand to mouth”, reflecting uncertainty over timing of any resolution
- Chemical markets are most price-volatile since 2008
- Demand is weakening due to inflation, higher interest rates and consumer pressure, hitting purchasing power
- Prolonged conflict risks inventory depletion, raising likelihood of further price shocks in oil and petrochemicals
- China has increased exports sharply (up ~40% year on year), helping offset supply gaps but pressuring global margins
- Asia faces the most acute supply disruption, with plant shutdowns and reduced operating rates due to feedstock shortages
- Structural risks are rising, including plant closures and bankruptcies, particularly where high costs meet weak demand
- Industry may be entering a “global reset”, driven by overcapacity, weak demand and sustained geopolitical disruption
