The 60-day ceasefire at the Strait of Hormuz has not eased the textile raw material supply chain. As of June 23, 162 fully loaded crude oil tankers were stranded in and around the strait, carrying approximately 120 million barrels of crude, excluding numerous 'dark ships' with AIS signals turned off. The real backlog likely exceeds official figures, meaning global crude flow efficiency remains impaired.
For the textile industry, crude oil is the source of polyester, nylon, and other synthetic fibers. Strait congestion directly raises costs for naphtha, PX, and other intermediates, impacting PTA, MEG, and ultimately polyester filament yarn. Although the ceasefire briefly pushed WTI crude to $73.21/barrel and Brent to $76.85/barrel, with a cumulative June decline of nearly 16%, this is more emotional correction than fundamental reversal.
Geopolitical Risk Premium Persists
Bloomberg Intelligence analyst Lee Klaskow notes the 60-day ceasefire is highly unstable, with unresolved Middle East differences that could escalate anytime. This means the recent oil price drop has already priced in short-term shipping recovery. If another ship attack occurs, risk premiums will rebound quickly, potentially triggering a price rally.
For the chemical fiber chain, this volatility means long-term cost uncertainty. While PX and PTA prices have followed oil lower, a geopolitical reversal could send upstream costs higher, squeezing downstream textile margins. In 2025, polyester filament yarn prices have already fluctuated sharply with oil, making procurement decisions more challenging.
High War Risk Premiums Drive Up Shipping Costs
Even after the ceasefire, war risk insurance premiums at Hormuz remain at 1% of vessel value, ten times the pre-conflict rate of 0.1%. A single VLCC crossing now costs $2 million in war risk premiums. This cost ultimately transfers to crude and chemical prices via freight.
Shipowners are conservative. Some medium and small operators are rerouting via the Cape of Good Hope, increasing voyage length and fuel costs; major lines are only deploying trial vessels. Daily transit numbers are still below 60% of pre-conflict levels, impairing global crude shipping efficiency.
For textiles, this means a longer supply chain from crude to fibers. Although current polyester and nylon prices have eased with oil, persistent shipping bottlenecks could delay raw material arrivals, causing regional shortages. China, the world's largest chemical fiber producer, relies heavily on imported crude and PX, making any supply disruption ripple through the chain.
Textile Firms Must Recalibrate Procurement
The short-term oil price drop from the ceasefire may be misinterpreted as a buying window. The real risk: When will the backlogged 120 million barrels actually hit the market? The current congestion means 'ships can go but dare not, and those that want to go must queue,' making it hard to quickly absorb months of accumulated capacity.
If the ceasefire expires unrenewed or the situation worsens, oil prices could rebound sharply, and chemical fiber prices would follow. Firms that bought at low prices may not receive timely shipments, facing dual pressure on costs and inventory.