Middle Eastern petrochemical producers are likely to keep their cost advantage despite the Iran war and the Hormuz crisis. Buyers are diversifying supply for now, while U.S. chemical companies gain in the near term.
Middle Eastern chemical producers are set to retain their long-term advantage over other regions, even as the Iran war and the Hormuz crisis disrupt exports. Industry analysts and executives point to two levers: an extensive production base and low-cost production backed by abundant naphtha supply.
Buyers diversify, but price still decides
Many buyers have moved to diversify their polymer supply because fewer volumes have come through the Strait of Hormuz since the Iran war began at the end of February. However, many customers see this as protection against the current crisis, not a long-term replacement, because the low prices of Middle Eastern polymers trump supply risks for most.
Morningstar analyst Christian Flemming told Reuters that buyers continue to base their purchasing decisions on price. A BASF spokesperson told the publication that the current bottlenecks are unlikely to reduce the long-term importance of Gulf producers in polymer markets.
The region dominates polyethylene exports
The Middle East is the world's biggest exporter of polyethylene, the most used plastic globally. It exported 18.7 million tons out of total global exports of 43.8 million tons in 2025, or 43% of the total, according to International Trader Publications. North America, the second-largest exporter, shipped 15.6 million tons.
Polypropylene exports from the region were the least affected among 12 key commodities and materials, falling 24% between April 2025 and April 2026, the UN said in an August analysis. By comparison, LNG exports slumped 95%, urea shipments fell 83%, methanol dropped 80% and ammonia exports fell 75%.
U.S. producers win in the near term
Prices of polyethylene and polypropylene have jumped by more than 50% since March. Cheap and abundant feedstock has made U.S. chemicals producers the immediate winners. Higher-cost Asian manufacturers announced reductions in capacity runs earlier this year because their naphtha was too expensive or trapped at the Strait of Hormuz.
Dow, for example, reported net sales of $6.4 billion in its Packaging & Specialty Plastics segment for the second quarter, up 27% from a year earlier. North America is also set to fill some of the supply gap, according to International Trader Publications.
Source: Oilprice.com
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