Energy Infrastructure Attacks in the Middle East Shake Global Chemical Markets

Methanol is a large-volume intermediate chemical for multiple downstream industries. It is also extensively used in laminates, pharmaceuticals, construction chemicals and solvent based industries. Any disturbance in production or exports of methanol from the Middle East can rapidly affect prices and supply in these industries.

Major Export-Oriented Chemical Segments

The war between the US and Iran has posed breathable risks to security across the straits of the Middle East and interfered with the supply of polyethylene (PE) and polypropylene (PP) to Brazil and other parts of Latin America as shipping lines cancel sailings, apply emergency surcharges and divert their vessels around the Cape of Good Hope.

Higher Landed Polymer Costs in Latin America

The conflict is beginning to drive up landed polymer prices in Latin America. New freight surcharges and extended shipping routes are pushing up CFR Brazil prices, despite the fact that FOB prices from suppliers have not risen significantly.

Middle Eastern producers shipped high volumes of polymers, such as PP, PE, and PVC, into Latin America in 2025, saturating the region with these supplies.

Meanwhile, the Brazilian petrochemical player, Braskem, has revised its domestic prices upwards, following logistical constraints and freight cost increases. The prices of PE for LDPE, HDPE, LLDPE, PP grades have been increased for March 2026. Market players say the change is a reflection of increased freight costs and uncertainty about imports becoming less available.

Airstrikes Disrupt LNG and Petrochemical Output in Qatar

Production and logistics in the area have been impacted by the recent geopolitical tensions. After airstrikes on Qatari energy infrastructure, QatarEnergy suspended production at multiple major plants. liquefied natural gas (LNG) production and associated downstream products at Ras Laffan Industrial City and Mesaieed Industrial City. This has led to the stoppage of production of a wide range of petrochemical and industrial products such as urea, polymers, methanol, and other derivatives.

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.

The battle has also prompted wider upsets in energy and chemicals value chains.

Market Impacts on Geopolitical Tensions

Several refineries and energy facilities across the region have halted operations due to drone attacks and security concerns.

Refineries and Energy Facilities Affected in Middle East

In the wake of the escalating tensions and retaliations, multiple energy production facilities around the region have also closed down temporarily.

• Major Israeli offshore gas fields, including Leviathan and Tamar, were shut down due to security risks linked to drone and missile activity.
• In Iraq, oil producers operating in the semi-autonomous Kurdistan region halted production as a safety measure. Meanwhile, operations at the Rumaila oilfield—one of Iraq’s largest oilfields operated by BP—were temporarily stopped because of its proximity to the escalation zone.

Overall, the disruption of energy infrastructure and petrochemical production is expected to increase uncertainty in global energy and chemical markets. Reduced supply from the Middle East could tighten availability of key petrochemicals such as methanol and fertilizers, while also increasing feedstock costs for downstream industries worldwide.