Brent crude is approaching $89 per barrel, and Middle East crude loadings have plunged by 8 million barrels per day since early July—this is not a futures morning briefing but the bitter reality the textile chemical fiber chain is swallowing. With the Strait of Hormuz transit at only 10%-15% of pre-conflict levels, the crude supply gap has shifted from a market risk premium to a tangible logistics bottleneck, meaning that for a host of chemical fiber products—from PTA and polyester filament to nylon, which all start with naphtha—costs are being repriced.
Event Background
The Strait of Hormuz is a vital artery for global crude, carrying about one-third of seaborne oil. Current disruptions, coupled with Iran's military ban on US forces in the Persian Gulf and surrounding waters, have cut Middle East loadings from 20 million bpd in early July to 12 million bpd, leaving a supply gap of 8.3 million bpd. Meanwhile, US commercial crude inventories surged by 17.423 million barrels in a single week—the largest increase in 3.5 years—while the Strategic Petroleum Reserve fell below 300 million barrels, severely eroding buffer capacity.
The Russia-Ukraine conflict continues to strike energy and transport infrastructure, amplifying supply uncertainty. The US announced a reduction in joint military exercises with South Korea, easing tensions in Northeast Asia, but disagreements in Middle East negotiations remain unresolved, ensuring geopolitical premiums persist. In this complex web, the oil market is characterized by "geopolitics setting the upside, supply-demand underpinning the floor."
Industry Impact
For the textile industry, every $10 rise in crude adds approximately 800-1,000 yuan per ton to chemical fiber feedstock costs. With Brent elevated, naphtha and PX prices climb, lifting PTA production costs and putting upward pressure on polyester filament and staple fiber. Low inventories make cost pass-through smoother, but end-demand has not rebounded in tandem.
OPEC and IEA have already cut their 2026 global oil demand growth forecasts. As the US summer driving season winds down and refinery run rates decline in September-October, the supply gap will narrow in Q4, likely dragging oil prices lower. This suggests chemical fiber costs may peak in autumn before turning downward—a critical signal for textile mills managing inventory and purchasing timing.
Downstream, rising feedstock costs will gradually seep into fabrics and garments. However, weak consumer demand limits price hikes, squeezing weavers' margins. Exporters must also watch currency fluctuations and freight costs, as geopolitical tensions may lift shipping insurance premiums, adding delivery uncertainty.