Global oil crisis spreads to multiple sectors.

One month after the war in Iran began, shortages of crude oil have deepened and are starting to spread into shortages of many other inputs, threatening to become broader and more persistent. Disruption to oil and natural gas flows through the Strait of Hormuz has reduced global supply by about 20%, pushing up fuel prices and constraining petrochemicals used to make everyday consumer goods such as footwear, clothing, and plastic bags.

The pressure is now moving into consumer markets. Prices for plastics, rubber, and polyester are rising together, with the clearest impact so far in Asia—home to more than half of global manufacturing output and heavily dependent on imported oil and related commodities.

From oil disruption to petrochemical and consumer shortages

In South Korea, people have rushed to stockpile trash bags, and the government has urged event organizers to limit single-use items. Taiwan has opened a hotline to help manufacturers facing low supplies of plastic feedstock, while rice farmers in the region say they may need to raise prices because vacuum bags cannot be bought.

In Japan, the oil crisis has raised concerns that patients with chronic kidney disease may face difficulty accessing dialysis treatment due to shortages of medical-grade plastic tubing. In Malaysia, glove manufacturers say shortages of a byproduct of oil used to produce rubber are threatening global supplies of medical gloves.

“That is spreading very quickly to everything: beer, noodles, snacks, toys, cosmetics,” said Dan Martin, co-head of business intelligence at Dezan Shira & Associates, a consulting firm helping international companies expand in Asia.

Mr. Martin said the shortages are also affecting petroleum derivatives needed to produce adhesives for footwear and furniture, industrial lubricants for machinery, and solvents for paints and cleaning agents.

“Spillover from oil disruption and shipping delays into petrochemicals and then consumer goods is unfolding very quickly,” he said.

Inflation pressure and growth risks

Higher energy and feedstock costs are squeezing manufacturer margins and pushing up consumer prices. At the same time, higher fuel costs are disrupting travel and logistics, while limited supplies of other Middle East-linked inputs—such as fertilizers and helium—could raise prices for food and electronics.

The IMF said in a March 30 blog post that the spillovers are complex and come at a time when many economies have limited capacity to absorb shocks. It added that “all paths lead to higher prices and slower growth.”

Naptha shortage drives tighter supply

Countries have begun releasing record amounts of oil from emergency reserves to offset the war’s impact. However, much of the shortage is driven by a lack of naptha, a byproduct of oil and a key input for plastics and other chemicals, with producers having almost no stock and few substitutes.

Some Asian petrochemical companies that source more than half of their naptha from the Middle East have cut production or declared force majeure in recent weeks due to input shortages.

South Korea has used temporary easing of U.S. sanctions on some Russian oil and oil products to buy naptha from Moscow since the war in Ukraine began. It has also prohibited exports of naptha to protect domestic supply.

Mr. Martin said the naptha shortage is raising input costs for manufacturers, particularly firms producing products with strict technical specifications such as semiconductors, auto parts, and medical or food packaging.

“There really aren’t many options left besides trimming assembly and using less energy,” he said. “Everyone is competing with one another. Everyone is in the same boat.”

Price data: plastics resin and packaging costs

As manufacturers scramble for inputs, the cost of plastics and plastic-containing products is rising. ICIS data show Asia-wide plastic resin prices rising as much as 59% to levels not seen since late February, around the time when the U.S. and Israel first conducted airstrikes on Iran.

One of Thailand’s largest plastic packaging wholesalers said it raised prices by 10% for clear plastic bags used by restaurants, street vendors, and food-delivery services. Indian media reported bottled water becoming more expensive as plastic cap prices have jumped fourfold since the war began. A Nongshim official said its plastic packaging supplier currently has only about one month of stock.

Shariene Goh, senior petrochemical analyst at ICIS, said consumer segments that rely heavily on plastic packaging, such as cosmetics, are more vulnerable to shortages than some other plastic-containing products.

“Finished goods can draw down on existing inventories, but those inventories will be depleted over time,” she said. “I think they may run out soon.”

Middle East supply exposure extends beyond naptha

Asia was the first to feel the energy shock, but new supply constraints are emerging that could affect the rest of the world if oil and other inputs cannot be produced or transported from the Middle East.

According to Morgan Stanley, beyond accounting for roughly 17% of the world’s naptha and 30% of plastic resin, the Middle East supplies about 45% of sulfur (used for fertilizer), 33% of helium (used in semiconductors, medicine, and aerospace), and 22% of urea and ammonia (used as crop nutrients).

U.S. farmers have had to buy more expensive fertilizer as import prices for urea have risen by about a third since the war began. In India, condom manufacturers report disruptions not only from shortages of packaging materials and petrochemical feedstocks, but also from ammonia shortages.

JP Morgan analysts wrote in a research note last week that the shock is unfolding in stages rather than all at once, describing it as a wave of supply disruptions spreading westward.

April risk: shift from price to physical scarcity

In recent weeks, Asian countries have tried to mitigate the price shock through stock releases, fuel-price controls, and shorter working hours to conserve energy. JP Morgan expects supply constraints to become more acute in April as the last crude shipments sent in anticipation of the war are due to arrive.

“The challenge has shifted from price to physical scarcity,” the analysts said. “Asia is no longer in a preventive stance.”

Analysts also noted that some consumer goods producers are delaying purchases of inputs in hopes prices will ease if the Middle East conflict ends.

Producers adjust operations and consider substitutes

A Chinese nylon producer in Jiujiang said that since Hormuz closed, the price of feedstock needed to produce fabrics has jumped about 50%, while customers in textiles and apparel are unwilling to accept the higher costs. The plant, with more than ten workers, remains in operation only to fulfill current orders, adopting a wait-and-see approach to avoid paying higher inputs and producing goods without buyers.

“I am worried,” the operator said. “The whole industry feels the same. No one knows how the war will unfold.”

Other firms are trying to cut costs by reducing plastic use in packaging. In Indonesia, plastic prices have doubled in a month, and companies are trimming packaging thickness. Some are considering switching to paper, glass, aluminum, or recycled plastic, though each option brings durability, safety, and supply-chain challenges and can take six months to a year to implement.

Stephen Moore, founder of the plastic-trade data platform MLT Analytics, said shifting to substitute materials can also be expensive. He noted that global recycled and bioplastic supplies are already constrained, and bioplastics tend to cost five to seven times more than fossil-fuel plastics.

“If things return to normal in Hormuz tomorrow, I think it will still be several months before the plastics industry in Asia recovers to some extent,” he said.