Iran war will debilitate petrochemicals for the rest of 2026

The war in Iran has upended all of the petrochemical industry’s expectations for 2026.The year was supposed to be one of surplus: petrochemical supplies are glutted, and producers are working through their longest and deepest downturn in a generation. Now the war has taken out oil and petrochemical production in the Middle East and Asia because energy installations have been struck by drones, and ships are unable escape the Persian Gulf. More output is lost every day. Even if hostilities were to cease tomorrow, it would take months, and possibly the rest of the year, for business to return to normal.At S&P Global’s World Petrochemical Conference in Houston last week, market analysts and chemical executives warned that the bad situation is only getting worse. Speakers didn’t hesitate to use superlatives. “On March 1, we put out a report saying ‘the biggest supply disruption in history, question mark.’ Well, that question has been definitively answered: it absolutely is,” said Jim Burkhard, S&P Global Energy’s head of research for oil markets, energy, and mobility.Before the war, Burkhard said, some 21 million barrels of oil and refined products—about 20% of global supply—exited the Persian Gulf through the Strait of Hormuz every day. Some oil is trickling out on occasional ships that make it through or via pipelines to the Gulf of Oman and the Red Sea. Overall, for March, the market was missing about 14 million barrels per day.Most of this product had been destined for Asia. “Asia is the epicenter. That is