The crude oil market experienced a dramatic intraday surge, with WTI climbing from $79.5 to $84 per barrel, a gain of over 7%, and Brent reaching $87. The trigger was Iran's ballistic missile attack on a US base in Jordan, dashing hopes for a ceasefire in the Middle East. For the textile industry, this is not just geopolitical news—it signals a new round of cost pressure on chemical fiber raw materials.
Transmission Mechanism of the Oil Price Spike
Crude oil is the starting point of the chemical fiber supply chain. The prices of major polyester products such as PTA, ethylene glycol, polyester staple fiber, and polyester filament yarn are highly correlated with oil. The near-7% jump in oil within hours means procurement costs for chemical fiber raw materials will rise noticeably in the next one to two weeks. Industry data shows that if oil remains above $80, polyester staple fiber costs could increase by 300-500 yuan per ton.
More importantly, this price surge is not a one-off event. Falling US crude inventories, low shipping activity in the Strait of Hormuz, and Iran's renewed emphasis on controlling the strait have amplified supply-side uncertainties. An analyst from DBS Bank noted that Brent crude will likely trade in a volatile range of $80-100 per barrel in the short term. This means textile chemical fiber companies face a persistently fluctuating cost environment, not a single price shock.
Direct Impact on Chemical Fiber and Downstream Textiles
Rising chemical fiber costs first pressure producers of polyester and nylon products. PTA, the direct raw material for polyester, has the strongest price elasticity with crude oil. If oil remains at current levels, PTA spot prices may increase by 200-400 yuan per ton. If this cost increase cannot be fully passed down to fabric and garment buyers, the processing margins of chemical fiber mills will shrink.
From an industrial cluster perspective, weaving mills in Shengze, Keqiao, and Changxing face a dilemma: either accept high-cost raw materials and sacrifice profits if order prices do not rise, or reduce operating rates to cut consumption, which impacts capacity utilization and employment. For export-oriented companies, the situation is more complex. Overseas clients typically lock in prices quarterly or semi-annually, making it difficult to adjust contract prices in response to short-term raw material fluctuations. Some orders may become loss-making.
Historical Context and Current Trends
During the Russia-Ukraine conflict in 2022, Brent crude briefly exceeded $130 per barrel, driving polyester staple fiber prices up nearly 25% within two months. While the current Middle East conflict is less intense, the risk to the Strait of Hormuz poses a more direct threat to global oil shipping. The strait handles about one-third of the world's seaborne oil trade. Any disruption could quickly escalate prices due to supply interruption fears.
At the same time, US monetary policy is influencing oil price expectations. Trump's threat of retaliatory strikes against Iran hours before the Fed's decision suggests geopolitics and financial policy are intersecting. If the Fed maintains high interest rates, a stronger dollar will partially curb oil price gains, but this offsetting effect is limited under current tensions.