Chemical Buyers Maintain Middle East Supply Reliance
Despite a 40% price increase, operators are holding onto traditional suppliers due to their lower feedstock costs.
Updated on Oct. 16, 2026 in Oil and Gas
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Polyethylene buyers continue to rely on Middle Eastern suppliers despite a 40% price spike following the closure of the Strait of Hormuz in late February. The disruption, which removed 20% of global ethylene capacity, has driven chemical producers in North America and Europe to increase cracking rates to meet rising demand.
Why it matters
Middle Eastern producers remain the preferred source for buyers because their access to low-cost hydrocarbon feedstocks keeps them globally competitive. While the supply shock forced a temporary shift toward regional suppliers, price sensitivity continues to anchor purchasing decisions to traditional export hubs.
Polyethylene prices have climbed over 40% since February as the Strait of Hormuz closure removed 20% of global ethylene capacity and 40% of Asian naphtha supply. Domestic and regional suppliers have captured roughly 20% of total demand in the interim.
The players
Eastman Chemical
A global specialty materials company that manufactures chemical products for diverse end markets.
Dow
A global multinational chemical corporation focused on plastics, chemicals, and agricultural products.
The details
Chemical companies are employing dual-sourcing strategies to mitigate risk while balancing higher costs from non-Middle Eastern producers. Producers are aggressively increasing ethylene cracking rates to fill the supply void created by the regional blockage. Eastman Chemical reported a 4% increase in selling prices during the second quarter as it navigated the tighter market conditions.
Timeline
Late February 2026: Strait of Hormuz closure begins, triggering price spikes.
Q2 2026: Eastman Chemical records a 10% revenue increase and 4% price hike.
July 2026: Dow executive confirms the trend of rising polyethylene prices.
Market Landscape
This market shift follows a pattern set by the 2026 Strait of Hormuz supply disruption, which fundamentally altered global ethylene capacity and buyer behavior. The reliance on Middle Eastern feedstocks remains a central constraint on how the industry manages supply chain risk.
Operators should anticipate sustained price volatility as suppliers prioritize high-margin volume and maintain reliance on traditional Middle Eastern feedstock advantages. Procurement teams should monitor North American production output as a leading indicator for potential shifts in regional supply availability.
The takeaway
The chemical sector demonstrates that price competitive advantages often outweigh supply chain diversification efforts during periods of geopolitical stress. Operators should track regional cracking rates to determine if domestic supply can continue to absorb the capacity gap created by the current trade disruptions.
Further reading
For more on industry supply trends, visit our Oil and Gas section.
Source note: This article includes information reported by Hydrocarbonprocessing.
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