Middle East Chemical Production Stays Competitive Amid Turmoil

The chemical industry in the Middle East continues to hold a competitive edge in production costs despite the current turmoil related to the Iran war and the associated crisis in the Strait of Hormuz. As companies adapt to the changing landscape, short-term shifts in polymer sourcing are benefiting U.S. manufacturers, yet the region's long-term advantages remain strong.

Adaptation and Diversification

Due to the ongoing conflicts in the Persian Gulf, many buyers have started diversifying their polymer sources. This change arises from a reduction in supplies coming through Hormuz since late February, challenging manufacturers in the region. However, analysts suggest that companies are viewing these adjustments as a temporary measure amid the crisis, rather than a permanent shift away from Middle Eastern suppliers.

According to industry experts, businesses still recognize the Middle East's significant advantages, including a robust production base and the availability of low-cost feedstocks. The abundant supply of naphtha allows the region to stay competitive on the global market, crucial factors highlighted by leading industry executives.

Statistics That Tell the Story

The Middle East is a dominant player in the global polyethylene market. In 2025, its exports represented an astounding 43% of all global polyethylene shipments, with the region exporting 18.7 million tons out of a total of 43.8 million tons worldwide. North America followed as the second-largest exporter with 15.6 million tons during the same period.

Interestingly, the crisis has impacted various sectors differently. While overall exports in the Middle East have significantly declined, the exports of polypropylene remained relatively stable, dropping only by 24% between April 2025 and April 2026. In contrast, other commodities faced substantial declines, including liquefied natural gas with a drop of 95% and ammonia, which plummeted by 75%.

Impact on Prices and Competitors

The recent turmoil has not only affected the supply of polymers but has also led to a staggering increase in prices. Since March, prices for polyethylene and polypropylene have surged by over 50%. This situation has opened new avenues for U.S. chemical producers who benefit from low-cost feedstocks as competitors in other regions, particularly Asia, face challenges.

In fact, high-energy costs have prompted many European chemical manufacturers to cut back on production capacity, further solidifying the United States' position in global markets. For example, Dow Chemical reported a remarkable rise in its net sales within the Packaging & Specialty Plastics segment, totaling $6.4 billion in the second quarter—a 27% increase from the previous year. This increase was largely attributed to a remarkable spike in polyethylene pricing, which rose by over 40%.

Looking Forward

Even with the uncertainties surrounding the Hormuz situation, the Middle East's ability to produce cost-effective chemicals positions it well for the future. Most industry players agree that while current adjustments are being made, the underlying competitive advantages of the region are likely to ensure its continued relevance in global markets.

As analysts continue to monitor the developments in the Persian Gulf, it becomes increasingly clear that the Middle East's chemical sector is likely to retain its importance in the face of ongoing challenges.