Brent crude approached $89 per barrel, and Middle East crude loadings plunged from 20 million barrels per day in July to 12 million, creating a supply gap of 8.3 million barrels per day. For the textile industry, this is not a distant international headline but a direct signal that the chemical fiber cost curve is about to be redrawn. Crude oil accounts for about 60% to 70% of polyester production costs, and every month of geopolitical premium could raise raw material cost pressure for downstream fabric mills by 5% to 8%.
Background Transit through the Strait of Hormuz has recovered to only 10% to 15% of pre-conflict levels, far below the 45% claimed by the US. Iran's military has explicitly banned US forces from the Persian Gulf, the Gulf of Oman, and the Strait of Hormuz, and has issued a bounty policy, escalating US-Iran tensions. Meanwhile, Russia and Ukraine continue to strike each other's ports, refineries, and military facilities, while military exercises in Northeast Asia have been reduced. These overlapping geopolitical risks have created a real logistics gap in the crude market, not just a risk premium.
For the textile supply chain, oil price fluctuations transmit along the naphtha-PX-PTA-polyester chain, typically with a lag of two to four weeks. Brent crude remaining elevated means PX and PTA arriving in September and October will carry significantly higher costs. According to public industry data, global crude and product inventories are at five-year lows, with US commercial crude stocks surging by 17.423 million barrels in one week and the Strategic Petroleum Reserve falling below 300 million barrels, leaving little buffer and amplifying supply-side fragility.
Industry Impact Chemical fiber producers are first in line. Polyester filament, the most widely used synthetic fiber in textiles, is highly correlated with crude prices. If crude stays above $85, ex-works prices for POY and FDY may rise by 300 to 500 yuan per ton, directly squeezing fabric mills' margins. For export-oriented textile companies, higher raw material costs combined with currency fluctuations could weaken price competitiveness, especially if Southeast Asian rivals do not raise prices simultaneously, raising the risk of order diversion.
Inventory strategy is also under pressure. With global crude inventories low, prices could fall quickly if tensions ease, but if the conflict persists, chemical fiber raw material prices will stay elevated. Textile firms must balance between stockpiling and waiting for a pullback. Historical patterns show that after geopolitical premiums fade, crude prices often drop by more than 10% within two to three months, but during that period, inventory costs can strain cash flow. Therefore, phased purchasing and forward contracts are safer than one-time bulk buying.