The Strait of Hormuz Crisis Rewrote the Global Ethylene Pricing Map in 2026

Unprecedented naphtha supply disruption triggers production curtailments, price surges, and a fundamental reassessment of feedstock security across the global petrochemical industry.

When US-Israeli airstrikes closed the Strait of Hormuz on February 28, 2026, the shockwaves travelled far beyond crude oil markets, reaching deep into the petrochemical supply chain and permanently reshaping ethylene pricing dynamics across Asia, Europe, and North America.

Why the Strait of Hormuz Closure Hit Petrochemicals So Hard

The Strait of Hormuz handles roughly 20% of global seaborne oil trade and a significant share of LNG exports. For the petrochemical industry, however, its closure triggered something more immediate, a direct feedstock crisis centred on naphtha, the primary input for steam crackers across Asia and Europe.

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The Middle East supplies a disproportionate share of global naphtha exports, nearly all of which transits through the Strait. South Korea sources over 50% of its naphtha from Middle Eastern suppliers, while Japan depends on the region for approximately 70% of its naphtha imports, two countries that together operate some of the world's largest integrated steam cracker complexes.

Coordinated strikes on Iran under Operation Epic Fury on February 28 triggered retaliatory blockades in the waterway. By March 4, Iran officially declared the Strait closed, and insurance providers swiftly withdrew war-risk coverage for vessels attempting transit, rendering passage economically unviable for most operators. The International Energy Agency later characterised the disruption as the largest supply disruption in the history of the global oil market.

Ethylene Price Shock and Large-Scale Production Curtailments

The impact on global naphtha benchmarks was swift and severe. UAE naphtha prices surged by approximately 65%, CIF Japan benchmarks climbed nearly 81%, European naphtha markets recorded gains of around 60%, and Singapore benchmark values rose by nearly 82% at the peak of the disruption. The sharp escalation in feedstock costs placed cracker margins under intense pressure across all major petrochemical hubs.

Ethylene operating rates in Northeast Asia fell from approximately 80% in February to nearly 70% by March, with several South Korean crackers reducing utilisation to around 65%. Major production curtailments followed across the region: Mitsubishi Chemical reduced ethylene output at its Kashima and Mizushima facilities from March 6; Shell and CNOOC shut their Huizhou cracker operations entirely; and Formosa Petrochemical declared force majeure on approximately 2.93 million tonnes per year of ethylene capacity in Taiwan. Ethylene prices across Northeast Asia more than doubled during the crisis period, reaching levels not seen since the post-pandemic supply squeeze of 2021.

North American producers operating ethane-based crackers remained comparatively insulated from the disruption. Since ethane pricing tracks natural gas economics rather than crude oil, US producers maintained a significant feedstock cost advantage over Asian and European naphtha-fed operators, widening their export competitiveness at the height of the crisis.

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Market Outlook

Once Strait of Hormuz logistics normalise and naphtha supply chains stabilise, the broader ethylene oversupply cycle linked to China's aggressive capacity additions during 2024 and 2025 may gradually reassert itself. However, the 2026 crisis has already accelerated critical industry conversations around feedstock diversification, strategic naphtha reserves, and supply-chain resilience, structural shifts that are unlikely to be reversed regardless of how the geopolitical situation evolves.

About Price WatchTM

With its real-time spot market intelligence, forecasting models, and in-depth market analysis, Price WatchTM helps businesses monitor pricing trends, track supply disruptions, and make informed procurement decisions. Covering key ethylene markets across China, South Korea, Japan, Taiwan, Europe, and the USA, Price Watch delivers the regional intelligence and pricing precision required in today's rapidly evolving petrochemical industry.

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This release was published on openPR.