Volatility in commodity and petrochemical markets is rising globally amid soaring geopolitical tensions in the Middle East and disruptions near the Strait of Hormuz. Important chemicals such as methanol, urea, ammonia, sulphur, styrene, PVC and LAB have experienced price hikes as a result of supply worries, increasing feedstock prices and transportation interruptions. Energy, especially natural gas, has also rallied on production stoppages in Qatar. Copper and steel supply chains in metal are also experiencing logistical problems and increasing freight charges. In general, conflict risk is tightening supply across energy, chemicals and metals, leading to greater price volatility, and driving buyers to consider alternate sources of supply.
Methanol
The methanol market is currently facing high volatility and upward price pressure, mainly due to escalating geopolitical tensions in the Middle East, particularly involving Iran. These tensions have led to sharp price increases in China, where methanol futures have risen significantly. The growing Iran–Israel conflict has raised concerns about possible damage to Iranian petrochemical facilities and disruptions to global supply chains.
The conflict has also affected shipping routes, creating uncertainty around the supply of Iranian methanol, which is an important source for many Asian markets. As of March 3, 2026, reports suggested possible restrictions or disruptions in the Strait of Hormuz, which pushed methanol futures higher. QatarEnergy has declared force majeure on affected shipments to customers, signalling that it might be unable to fulfill contractual supply commitments due to factors beyond its control. During the week, methanol prices in the Middle East increased by around 7%, reflecting these supply concerns.
Urea
Urea prices in the global market surged this week amid escalating geopolitical tensions in the Middle East. Prices in Asia increased by around 12%, while Saudi Arabian urea prices rose by nearly 17%, reflecting severe supply disruptions. The situation has also affected India, where three urea plants have reduced production due to a sharp decline in LNG supplies from Qatar, tightening short-term availability. In addition, granular urea prices in Egypt have risen significantly following the effective disruption of shipping through the Strait of Hormuz. As a result, buyers are increasingly seeking alternative suppliers from North Africa and Southeast Asia to secure near-term supply.
Ammonia
Ammonia prices in the global market increased this week due to rising geopolitical tensions in the Middle East. Prices in Saudi Arabia rose by about 11%, while European ammonia prices increased by nearly 5%, reflecting supply concerns. Ongoing plant outages and lower inventories have also supported higher spot prices.
The conflict has raised concerns about possible disruptions to energy infrastructure and shipping through the Strait of Hormuz, which could affect ammonia supply. In addition, high natural gas prices, especially in Europe, have increased production costs, putting further upward pressure on ammonia prices.
Sulphur
Global sulphur prices are showing stable to upward movement due to rising geopolitical tensions in the Middle East, particularly the escalating US–Iran conflict. During this period, sulphur prices in China increased by around 6%, supported by growing supply concerns. Nearly half of global seaborne sulphur exports originate from the Middle East, and the conflict has pushed up bunker fuel costs and war-risk insurance premiums, limiting spot cargo availability.
Market participants are adopting a “wait-and-see” approach regarding shipments through the Strait of Hormuz, as buyers remain cautious about committing to higher prices, creating market volatility.
The situation intensified on February 28, when Iran’s Islamic Revolutionary Guard Corps announced the closure of the Strait of Hormuz, prompting several tanker owners and traders to suspend shipments. As this route is a key channel for global energy and chemical trade, the disruption threatens Middle Eastern sulphur exports and could impact downstream industries, including Indonesia’s MHP (nickel-cobalt materials) production and China’s phosphate fertilizer sector, both of which depend heavily on Middle Eastern sulphur supplies.
Natural Gas
Natural gas prices increased significantly amid rising geopolitical tensions in the Middle East. Prices in Europe rose by about 16%, while Saudi Arabian natural gas prices increased by around 4%. The surge followed production disruptions in Qatar, one of the world’s largest LNG exporters, after military strikes targeted key energy facilities.
Global gas markets also reacted to concerns over possible disruptions to shipments through the Strait of Hormuz, a critical route between Oman and Iran that handles nearly 20% of global LNG trade. Qatar temporarily halted production at facilities in Ras Laffan Industrial City and Mesaieed Industrial City following drone strikes.
The natural gas market is expected to remain highly sensitive to developments in the conflict, with the potential for further price volatility throughout March 2026.
Styrene
In March 2026, the styrene market is facing strong price pressure and volatility due to supply chain disruptions linked to the escalating US–Israel–Iran conflict that intensified in late February. The conflict has affected shipping through the Strait of Hormuz, a critical route for petrochemical feedstocks, pushing up prices for key raw materials such as benzene and crude oil.
Possible disruptions to feedstock and finished product shipments from the Middle East, especially Saudi Arabia, have tightened supply in Europe and Asia. As a result, market participants have adopted a “wait-and-see” approach, with some transactions for polymers and intermediates temporarily paused, increasing uncertainty and bullish sentiment.
Several companies have also declared force majeure on styrene monomer (SM) supply. Aster (Singapore) announced force majeure due to potential feedstock disruptions, although its Pulau Seraya SM plants were still operating as of March 6, 2026. PCS Pte. Ltd. (Singapore) and TKSC have also issued force majeure notices.
The conflict has created a severe shortage of feedstock for many producers, leading to production shutdowns, reduced operating rates, and multiple force majeure declarations across Asia’s styrene market.
PVC
The PVC market is witnessing a strong upward trend due to supply chain disruptions, rising raw material costs, and growing geopolitical tensions in the Middle East following the escalation of the Iran-related conflict. In early March 2026, PVC prices increased by around 1.5% in the Middle East, 2.5% in Europe, and 5% in Asia.
The conflict has created major shipping bottlenecks, particularly in the Strait of Hormuz, forcing several suppliers to suspend offers. Although PVC demand in Asia remains strong, supported by ongoing infrastructure development, supply from key exporting regions such as the Middle East has become limited.
On March 3, 2026, QatarEnergy announced it would halt production of certain downstream products, including polymers such as PE, PP, and PVC, after attacks on its facilities. In addition, port operations at Jebel Ali in the UAE, which handles about 65% of GCC polymer exports, were threatened after a missile strike caused a fire nearby.
As a result, polymer shipments, including PVC, from the Middle East to Asia and the Americas have been suspended or severely disrupted. The situation remains highly uncertain as ongoing military actions and logistical constraints continue to restrict petrochemical trade from the region.
Linear Alkyl Benzene (LAB)
In the global market, LAB prices remained steady in late February 2026, driven by cautious purchasing behaviour among downstream buyers; however, prices are now expected to rise sharply, propelled by escalating geopolitical disruptions to feedstock costs and import flows. The US-led "Operation Epic Fury" (February 28, 2026) and the effective closure of the Strait of Hormuz have sent immediate shockwaves through the Linear Alkyl Benzene (LAB) market. Nearly 16% of global gasoline and naphtha flows — the critical aromatic feedstock stream for benzene production — transit the Strait of Hormuz, and their near-total disruption is driving sharp benzene cost inflation, directly squeezing LAB production economics. Naphtha prices soared alongside Brent crude as the petrochemical feedstock market registered some of the steepest gains across refined products, with LAB producers facing a feedstock cost surge that accounts for roughly 60–70% of their total manufacturing costs. The Middle East accounts for approximately 35–40% of global petrochemical export supply, and any sustained disruption to shipping or export infrastructure carries material implications for global chemical supply balances, including n-paraffins — the other key LAB feedstock. On the demand side, higher energy prices are filtering through to consumer and producer prices, particularly across Asia-Pacific economies heavily reliant on Middle East imports, weakening industrial activity and suppressing discretionary spending on detergents, household cleaners, and surfactants — LAB's primary downstream end-uses — creating a damaging cost-push, demand-pull squeeze across the entire LAB value chain.
Copper
Copper rod producers across the Gulf Cooperation Council (GCC) were already under pressure, facing order books that remained steady in volume but increasingly difficult to fulfill due to a tightening supply of copper cathode. The disruption has also cast uncertainty over the fate of Iranian refined copper exports and threatened to affect African cathode production through sulfur supply chains.
The impact on the copper market has already become tangible. Major shipping lines—including MSC, Maersk, CMA CGM, Cosco, Hapag-Lloyd, and Ocean Network Express—have suspended bookings or halted transits through the Strait of Hormuz since Monday, with insurers refusing to cover vessels navigating the strait.
While domestic demand for copper wire rod remains stable in the GCC region, the scarcity of copper cathode needed for production is exacerbating the overall market supply shortage.
Iran:
A substantial portion of Iran’s refined copper output is processed domestically into wire rod and exported as semi-finished goods. The majority of these exports are shipped via Bandar Abbas, Iran’s most strategically vital port, located directly on the Strait of Hormuz. Satellite imagery reviewed by multiple media outlets since March 2 has revealed extensive damage to naval facilities at Bandar Abbas following US and Israeli strikes, with commercial port operations reported as suspended. In addition to China, copper cathode was also being exported to India, while Turkey had historically been a key destination—though buyers there have been reluctant to acknowledge receiving the material due to sanctions-related risks.
Another concern raised by market participants is the potential disruption to sulfur shipments from Middle Eastern producers—including the Abu Dhabi National Oil Company (ADNOC), one of the world’s largest suppliers of granulated sulfur—to copper operations in Africa.
Steel Market
Europe:
lSteel imports to Europe are facing longer delivery times and higher costs as the conflict in the Middle East disrupts shipping routes and energy markets, according to market sources. While the full impact remains uncertain, the EU steel market is closely monitoring developments and avoiding significant purchases. These delivery delays are particularly critical as the EU plans to tighten steel import quotas from July 2026, including a proposed 47% reduction in volumes and duties rising to 50%. Consequently, higher freight and energy costs are also expected to push up both import and domestic steel prices in the region.
China:
A recent blockade of the Strait of Hormuz has disrupted key shipping routes, forcing Chinese steel exporters to pause new orders amid soaring freight costs. The Middle East was a crucial market for Chinese steel products in 2025, making this disruption particularly impactful. Chinese steel traders have warned that a prolonged closure exceeding one month could severely impact domestic prices, as unsold inventory accumulates in China and may lead to a price decrease. Furthermore, higher freight rates will affect shipments of both previous orders and new sales of finished and semi-finished steel products from Asia to the Middle East, potentially prompting some producers to redirect supply to Asian markets and intensify regional competition.
Iran:
Iran's potential absence from the market poses a significant threat to the global semi-finished steel trade and supply. This vacuum is already being felt; for instance, an Indonesian producer reportedly raised its slab and hot-rolled coil (HRC) prices in response. Similarly, a Chinese trading company that supplies slab and billet to Turkey indicated that its freight costs have risen by 15-20 percent, leading it to raise its billet offers—though the price impact has so far been muted by destocking in the Chinese domestic market. Semi-finished prices also rose earlier in response to widespread protests in Iran in late December and early January, underscoring the region's volatility.
GCC:
Some Chinese trading firms stated that it has suspended new offers to the Middle East while auditing the shipment status of existing orders. The source added that shipping companies have ceased offering freight rates for routes into the Middle East and Europe, effectively halting new deals. This disruption is creating ripple effects in established trade flows. Since last year, Saudi HRC and UAE hot-dipped galvanised (HDG) have increasingly made their way to the EU market, benefiting from exemptions under the bloc's steel safeguards. The final lots of this safeguard-free material from the GCC are scheduled to arrive in the first half of 2026, but the current conflict now puts this supply at risk. Some traders are also concerned about whether a wider escalation could affect material shipping through the Red Sea, potentially delaying material scheduled to arrive before the new safeguard measures come into force.
