Hormuz Strait Closed Again! U.S.-Iran Talks Collapse Before Even Beginning—Crude Oil Volatility and Plastic Futures Correction Bring Fresh Tests to the Plastics & Chemical Industry

In just two days, the Middle East situation has undergone a deadly reversal! Although the U.S. and Iran had just reached a bilateral temporary ceasefire agreement, Israel launched its most intense air strikes to date against Lebanon the very next day—causing the U.S.-Iran talks to collapse before even formally commencing. The Strait of Hormuz has once again been fully closed to shipping; the U.S. and Iran have hardened their stances in confrontation, sending global crude oil markets into massive turmoil. Domestic plastic futures have likewise come under pressure and corrected downward, dragging the entire global plastics and chemical industry chain into a high-risk abyss. Raw material production cuts and across-the-board price hikes at the downstream end are sweeping the sector—escalating the industry’s crisis continuously! Deadly Reversal! Uncontrolled Air Strikes Between Israel and Lebanon Cause U.S.-Iran Talks to Collapse Before Launch On Tuesday, U.S. President Donald Trump and Iran reached consensus on a bilateral temporary ceasefire—briefly offering hope for easing tensions in the Middle East. Yet the following day, Israel launched its most intense air strikes against Lebanon to date, directly derailing the U.S.-Iran negotiations. The Strait of Hormuz was once again fully closed, forcing oil tankers en route to turn back and causing numerous vessels to become stranded near the strait. An Iranian military spokesperson explicitly stated that although Iran seeks to reach an agreement through negotiations, it is fully prepared for prolonged warfare should talks fail. In response, U.S. President Trump issued a forceful counterwarning: if agreements are not honored, the U.S. military will launch “firepower beyond anyone’s imagination.” This fierce exchange completely shattered market expectations of a ceasefire, reasserting geopolitical risk as the dominant driver in global energy and chemical markets. Source: AI Crude Oil Turmoil! External Prices Rise While Domestic Prices Fall Plastic Futures Under Broad Pressure and Correcting Downward Amid this sudden shift, international crude oil prices ended their prior sharp decline and rebounded rapidly, with geopolitical risk premiums returning. However, domestic futures were dragged down by multiple factors—including investor sentiment, prior price declines, and relatively weak downstream demand. At midday on April 9, domestic futures’ main contracts showed a pattern of “more declines than gains,” with the energy & chemical sector broadly correcting. Market bulls and bears are now locked in increasingly intense contention. From a chart perspective, main contracts—including ethylene glycol, SC crude oil, PVC, and methanol—fell over 3%, while the main plastic futures contract dropped more than 2%. This divergence—rising external crude prices but weakening domestic prices—has further pressured plastic futures downward. Currently, market trading logic is entirely driven by geopolitical developments, volatility has surged markedly, and operational risks across the industry continue to climb. Source: Zhuan Su Shi Jie (Specialized Plastics Vision) Production Cuts Deliver a Blow! Ethylene Shortfall Hits 22 Million Tons Downstream Price Hikes Sweep Across Entire Chain—Impacting Livelihoods As the world’s core ethylene-producing region, sustained geopolitical turmoil in the Middle East has severely disrupted regional petrochemical supply systems. Military strikes by the U.S. and Israel against Iran have directly interrupted petrochemical feedstock supplies. According to industry estimates, approximately 15 million tons of ethylene output have already been lost in Iran and other affected areas; global ethylene production is projected to fall by 22 million tons in 2026—equivalent to 12% of global ethylene output in 2025. Source: Today’s Plastic Pricing The tightening supply of core raw materials is rapidly transmitting upstream pressure all the way to downstream end-users. Qinghai Aijie Industrial & Trading Co., Ltd. issued a notice yesterday stating that, due to continuous sharp increases in raw material prices and persistently high costs, effective April 8, the price per case of food containers will rise by RMB 6—marking the third such increase since March 6, with cumulative hikes reaching RMB 16 per case. The company candidly admitted, “This round of price adjustment is truly unavoidable,” underscoring the severity of cost pressures.

Geopolitical Conflict Disrupts Expectations Beyond Anticipation—Reshaping the Landscape of the Petrochemical & Chemical Industry

By Qin Jiali; Edited by Li Zhuang Driven by the Middle East’s geopolitical conflict, international crude oil prices have experienced violent fluctuations—exerting major impacts on the petroleum, petrochemical, and related industrial chains. Recent persistent geopolitical conflict in the Middle East has directly pushed up global oil prices and chemical transportation costs, potentially triggering a fundamental reshaping of global energy and chemical supply-demand structures. Institutional analysts—including Everbright Securities—identify three key investment themes worth close attention: first, the upstream oil & gas sector—including China’s “Big Three” state-owned oil companies (“Sinopec”, “PetroChina”, and “CNOOC”); oilfield services; and oil shipping—whose long-term value is becoming increasingly prominent. Second, chemical products with relatively high production capacity concentration in the Middle East and Europe—such as methanol, urea, potash fertilizer, olefins, methionine, and vitamins. Third, coal-chemical alternatives to oil-based routes. Violent Fluctuations in International Crude Oil Prices Upstream Oil & Gas and Oilfield Services Firms See Long-Term Value Highlighted Since February 28, intensifying Middle East geopolitical conflict—and the suspension of production at several mega-oilfields across Middle Eastern countries—have driven sharp increases in international crude oil prices. Brent crude futures peaked at USD 119.50 per barrel on March 9—up nearly 95% from the start of this year. Since March 9, the Group of Seven (G7) nations have indicated they will discuss coordinated releases from emergency petroleum reserves. Meanwhile, President Trump recently announced plans to temporarily waive certain petroleum-related sanctions and declared that U.S. military operations against Iran are “imminently concluding”—prompting immediate price volatility in international crude oil markets. As of March 11, Brent crude futures briefly retreated to around USD 90 per barrel—still remaining at a near-term high since April 2024. According to a research report by Dongwu Securities, recent sharp market adjustments likely stem from expectations that the Middle East conflict will not be resolved quickly in the short term—triggering a broad market “risk-aversion mode.” Sectors including oil & gas, shipping, and coal stand to benefit from both geopolitical tension and rising prices, presenting potential short-term trading opportunities. However, investors must remain vigilant against the classic “buy on rumor, sell on fact” dynamic. Close attention should be paid to high-frequency data—including EIA crude oil inventory reports and developments concerning the Strait of Hormuz. Should the Strait of Hormuz remain closed longer than expected, global inflation could rebound—pressuring overall equity market valuations. Conversely, de-escalation of the conflict would trigger rapid corrections in commodity prices. Looking back at the first three quarters of 2025, falling oil prices and sluggish refining & petrochemical profitability weighed heavily on international oil & gas giants’ operating performance. During this period, PetroChina (601857.SH), CNOOC (600938.SH), and Sinopec (600028.SH) reported net profits attributable to shareholders of RMB 126.279 billion, RMB 101.971 billion, and RMB 29.984 billion respectively—representing year-on-year changes of -4.90%, -12.59%, and -32.23%. Per Everbright Securities’ research report, the overall rise in geopolitical risk premiums is expected to sustain higher oil prices for a period. As leading central SOEs in the upstream oil & gas sector, the “Big Three” oil companies and oilfield service firms see their earnings prominently enhanced during oil price upswings. Over the longer term, amid the new oil price volatility cycle beginning in 2023, PetroChina and CNOOC have outperformed their overseas peers in year-on-year profit growth—thanks to steadily increasing output and superior cost control capabilities. Even during oil price downturns, the “Big Three” have demonstrated notable earnings resilience. In their Q3 2025 reports, these companies universally noted that efforts to boost reserves and production, alongside advancing refining & petrochemical transformation and upgrading, have helped maintain resilient profitability.

Asia Top Stories Weekly Summary: Chemicals, Petrochemicals, and Energy Markets Reshaped by Geopolitics

Oct 12, 2026

ICIS News Asia reports on reshaped petrochemical trade flows driven by Middle East conflicts, India's expanded PVC trade remedies, and AkzoNobel's $1.35bn paint unit sale. The digest covers global overcapacity concerns, oil supply vulnerabilities, and regional adaptations toward specialty chemicals.

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