A research report from Guotai Haitong Securities indicates that in late February 2026, military strikes by the United States and Israel against Iran prompted Iran to blockade the Strait of Hormuz and attack U.S. military bases. These actions triggered significant volatility in global energy and chemical markets, with oil prices rising from $70.75 per barrel to $91.98 per barrel, a 30% increase. Due to concerns over future raw material supplies, Asian refineries have begun reducing operating rates.
In the chemical sector, the Strait of Hormuz handles 35% of global urea shipments, 33% of synthetic ammonia, and 45% of sulfur. If uncertainty in the Middle East persists, the balance of global fertilizer supply and demand could be substantially impacted.
In terms of price spreads, following the outbreak of conflict, margins for coal-to-ethylene, acrylic acid, maleic anhydride, purified phosphoric acid, MMA, and coal-to-propylene widened significantly. Conversely, spreads for ethylene oxide, polyethylene, polypropylene, and ethylene glycol narrowed considerably.
Key views from Guotai Haitong are as follows:
Middle East tensions continue to escalate, driving international oil prices higher. In late February 2026, military actions by the U.S. and Israel against Iran led to a blockade of the Strait of Hormuz and attacks on U.S. bases, causing sharp fluctuations in global energy and chemical markets. Prices of crude oil and downstream chemical products rose significantly. Between February 26 and March 12, the closing price of Brent crude increased from $70.75 to $91.98 per barrel, a gain of 30%.
Fears over raw material supply lead Asian refineries to cut production. The blockade of the Strait of Hormuz has heightened concerns among refineries about future feedstock availability. Several large integrated refining and chemical complexes in Asia have already reduced or plan to reduce operating rates. In South Korea, aside from the scheduled maintenance of S-OIL’s 800,000-ton PX unit, facilities operated by SK, Hanwha, and GS are also expected to lower production. Japan has not yet announced any output reduction plans. In China, plants such as Zhejiang Petrochemical, Sinochem Quanzhou, and Fujian Refining have cut rates due to raw material concerns, while Ningbo Daxie has halted operations. Taiwan has not disclosed any reduction plans.
Global chemical supply and demand are also affected by Middle East conflict. The Strait of Hormuz is responsible for 35% of global urea, 33% of synthetic ammonia, and 45% of sulfur shipments. Alternative transport routes have extremely limited capacity, covering only about 20% of normal shipping volumes. Should uncertainty in the Middle East continue, the global fertilizer supply-demand equilibrium may face significant disruption.
Chemical product spreads show mixed performance. Between February 28 and March 12, 2026, spreads for coal-to-ethylene, acrylic acid, maleic anhydride, purified phosphoric acid, MMA, and coal-to-propylene widened substantially, increasing by 1009%, 465%, 411%, 131%, 117%, and 104%, respectively, with gains exceeding 1,000 yuan per ton. In contrast, spreads for ethylene oxide, polyethylene, polypropylene, and ethylene glycol narrowed sharply, declining by 89%, 272%, 321%, and 1217%, respectively.
Risk warnings include sharp fluctuations in crude oil prices and potential policy shortfalls.