Closure of Strait of Hormuz disrupts Asia’s petrochemical supply chains, triggering force majeure, feedstock shortages, production cuts, and regional energy concerns.
The effective closure of the Strait of Hormuz following the February 28 military strikes on Iran by the United States and Israel has begun to significantly disrupt the supply chain of raw materials critical to Asia’s petrochemical industry. The escalating geopolitical tensions and maritime risks in the region have severely affected the movement of oil-based feedstocks, particularly naphtha, which is widely used in petrochemical production. As a result, many Asian chemical producers are facing procurement delays, forcing some facilities to reduce output while others have invoked force majeure clauses in their contracts.
One of the companies affected is Petrochemical Corporation of Singapore (PCS), which announced that it has issued a formal force majeure notice to all of its customers. This declaration releases the company from fulfilling certain contractual obligations due to circumstances beyond its control. According to PCS, the worsening conflict in the Middle East has severely disrupted international shipping routes and logistics networks, making it increasingly difficult to secure timely deliveries of feedstocks and other essential materials.
The move by PCS follows similar actions taken earlier by major Asian producers. Indonesia-based Chandra Asri Petrochemical issued its force majeure notice on March 3, while South Korea’s Yeochun NCC made a similar announcement on March 4. These developments highlight the growing pressure on petrochemical companies that rely heavily on supplies transported through the Strait of Hormuz.
Asian petrochemical producers depend heavily on the Middle East for their naphtha feedstock, with estimates suggesting that 70–80% of the region’s supply originates there. Most of this material is shipped through the Strait of Hormuz, making the route a critical artery for the petrochemical value chain. Any disruption to this passage immediately affects feedstock availability, plant operations, and ultimately downstream chemical production.
The crisis is not limited to naphtha shipments. Mitsubishi Gas Chemical of Japan has reported that methanol deliveries from Ar Razi Saudi Methanol Company—its joint venture in Saudi Arabia—have been temporarily suspended. Ar-Razi is among the world’s largest methanol producers, with an annual capacity exceeding four million metric tons. Any prolonged interruption in its supply chain could have widespread consequences for industries that depend on methanol as a key chemical building block.
The effects of the strait’s closure are also spreading beyond petrochemicals into refined petroleum products. The government of Thailand has responded by imposing an immediate halt on exports of fuel and other petroleum products. This precautionary step aims to safeguard domestic energy availability as the country attempts to maintain a strategic oil reserve equivalent to 60 days of supply. However, Thailand’s current reserves stand at approximately 38 days. Furthermore, only about 13 days’ worth of crude oil and gas shipments destined for Thailand have already passed through the Strait of Hormuz, prompting authorities to take urgent measures to avoid potential shortages.
Meanwhile, the disruption is beginning to affect operations in China as well. Zhejiang Petroleum and Chemical, a major refining and petrochemical complex partly owned by Saudi Aramco, has reportedly shut down a crude distillation unit capable of processing 200,000 barrels per day and has advanced its maintenance schedule. China imports roughly 12 million barrels of crude oil daily, with about 14% sourced from Iran, meaning a prolonged disruption could significantly impact its energy supply.
Despite these developments, some experts believe the immediate impact may be manageable. Japanese petrochemical analyst Masanori Kawakami notes that many countries in Asia maintain substantial strategic reserves, which could cushion short-term supply shocks. For example, Japan holds approximately 300 days’ worth of oil reserves, and its petrochemical production levels have not yet experienced significant changes. However, if the geopolitical tensions continue and shipping disruptions persist, the longer-term consequences for Asia’s chemical and energy industries could become much more severe.
