The escalating conflict in the Middle East is causing severe turbulence on global commodity markets. Supply disruptions, the blockade of the Strait of Hormuz, and geopolitical tensions between Iran, Israel and the United States are intensifying cost pressure across successive links of supply chains. What awaits the global economy if the situation in the region does not stabilise?
In recent months, there has been a significant increase in the prices of oil, gas, fertilisers, petrochemical products and aluminium. The scale of the increases is large and uneven. In some cases, energy commodity prices have risen by several dozen percent within a single month. It is also becoming increasingly clear that not only raw materials themselves are becoming more expensive, but also their processed forms, which is gradually translating into production costs and final prices across many industries.
Oil: will the current price shock last?
The sharp increase in energy commodity prices was driven, among other factors, by attacks on the Ras Laffan gas complex in Qatar. Following this event, Brent crude prices rose by 50% in one month.
Economists from Coface emphasise that prices are not rising evenly, which shows how varied the impact of the current geopolitical situation is on individual markets and types of commodities. This can be seen, for example, in the case of Oman DME crude, whose price exceeded USD 160 per barrel, while the price of U.S. WTI remains around USD 100.
“Damage to infrastructure and the blockade of the strait have led to significant disruptions in the physical availability of fuels, as well as uncertainty over future supplies in individual regions. As a result, we are seeing a clearly differentiated increase in fuel prices on local markets. At the same time, the scale of infrastructure damage and growing backlogs in order fulfilment indicate that supply pressure may persist for a long time, even if the Strait of Hormuz is eventually reopened,” says Dr Mateusz Dadej, Chief Economist of Coface in Poland and the Central and Eastern Europe region.
In the United States, retail petrol prices reached a record USD 3.96 per gallon, an increase of 35% month on month. In Asia, diesel prices in Singapore have almost tripled since the beginning of the conflict, reaching USD 256 per barrel. IATA, meanwhile, reports that global jet fuel prices have doubled.
Natural gas: supply disruption is the key problem
The natural gas market is also struggling with rising prices. In Europe, gas futures, based on the Dutch TTF index, jumped by 85% over the month to EUR 55/MWh, while the Asian benchmark, the LNG Japan/Korea Marker, doubled in value over the same period. This reflects the exceptional vulnerability of import-dependent markets to geopolitical shocks.
Although the United States appears less exposed to supply disruptions, the Henry Hub index is also under strong upward pressure, rising by 36% month on month. This means that energy tensions have already become global in nature.
As a result, the prices of many petrochemical products, for which Gulf states are key suppliers to Asia, are also rising at a rapid pace. The price of a tonne of naphtha in Singapore reached USD 1,000, representing an increase of more than 60% since the beginning of the conflict. Tensions in the Strait of Hormuz and historically low inventories in Asia, covering only two to three weeks, have already translated into rising prices for polymers such as polypropylene, polyethylene, polystyrene and PVC.
Sulphur prices have also increased by 25% within a month. Sulphur is a key raw material used in the leaching of copper and nickel ores. This poses a serious threat to major producers heavily dependent on this raw material, including Chile, the Democratic Republic of the Congo and Indonesia.
Fertilisers: prices are rising despite expectations of stabilisation
Gulf states play a key role in the fertiliser market, accounting for almost 19% of global exports of nitrogen fertilisers and 36% of the world’s urea supply. Saudi Arabia is also the fourth-largest exporter of phosphates. However, because natural gas accounts for as much as 80% of the cost of producing nitrogen fertilisers, the rise in gas prices automatically translates into more expensive fertilisers.
This is visible in the price of a tonne of granular urea, FOB Middle East, which has risen by 37% since the beginning of the conflict to USD 665.
“Although the European Union, including Poland, remains self-sufficient in fertiliser production, prices on this market are shaped globally. As a result, their increase will have a significant impact on the agricultural sector. In addition, the price shock is occurring at a particularly sensitive time of year, when farms are beginning to purchase and use fertilisers. This favours a stronger pass-through of higher fertiliser costs into the prices of final goods,” explains Dr Mateusz Dadej.
The negative effects of the Middle East conflict may extend beyond direct fertiliser supplies and affect countries such as India, Brazil and the United States, for which Gulf states provide 63%, 24% and 21% of nitrogen fertiliser imports respectively. Third countries may also be affected, including Morocco, the world’s largest producer of phosphate rock, which is heavily dependent on sulphur exported by Gulf countries.
Aluminium under pressure from the blockade and energy costs
The blockade of the Strait of Hormuz by Iran has placed Gulf states in a very difficult position. These countries account for 8% of global aluminium production. They are unable either to export their own output or to import the raw materials, such as bauxite and alumina, needed for smelter operations.
Moreover, on 16 March 2026, Aluminum Bahrain, or Alba, which accounts for 25% of regional aluminium production, announced the suspension of 19% of its output, equivalent to 5% of total aluminium supply in the region. Meanwhile, far from the tensions in the Middle East, Mosal announced the suspension of operations in Mozambique, citing excessively high energy costs.
In this deteriorating market environment, aluminium prices rose significantly, by 11.5% month on month. Since the beginning of the conflict, they have remained elevated, exceeding USD 3,500 per tonne, which represents an increase of nearly 25% over the past year.
“The consequences for the global economy result not only from the scale of the supply shock, but also from the wide range of applications of the goods affected by it. Crude oil, fertilisers and aluminium are commodities whose price increases will sooner or later translate into the prices of almost all goods, affecting every sector of the Polish economy. Although it is difficult today to determine clearly how long the blockade of the Strait of Hormuz will last, one thing remains certain: each additional day it continues deepens the negative effects for the global economy,” the expert concludes.
