Brent crude approached $89 per barrel, spot silver touched $65.13 per ounce, and gold rose to $4,383.44—on the morning of August 17, commodity markets responded with a sharp rally to the near-halt of traffic through the Strait of Hormuz. But for the textile industry, the number that truly warrants vigilance is not the gold price, but the decline in Middle East crude oil loadings from 20 million barrels per day in early July to 12 million barrels, and a daily supply gap of 8.3 million barrels. What does this gap mean? It means that chemical fiber raw material costs will enter a new cycle of increases. Oil-based fibers such as polyester filament and nylon chips are likely to see higher ex-factory prices, while downstream weaving and garment enterprises will see their profit margins further squeezed.
Background
Traffic through the Strait of Hormuz is currently only 10%-15% of pre-conflict levels, far below the 45% claimed by the U.S. side. This discrepancy is not merely a matter of information warfare; it directly determines the true tightness of crude supply. Iran has explicitly banned U.S. forces from the Persian Gulf, the Gulf of Oman, and the Strait of Hormuz, and has introduced a bounty policy, escalating U.S.-Iran tensions. Meanwhile, in the Russia-Ukraine conflict, both sides have struck ports, refineries, and military facilities, further amplifying energy supply uncertainty. The intertwining of multiple geopolitical risks has shifted the risk premium in the crude market from expectations to actual logistical gaps.
For the textile industry, this geopolitical event is not an isolated price fluctuation but the starting point of a cost transmission chain. Crude oil is the upstream of chemical fibers. For every $10 per barrel increase in Brent, polyester production costs rise by approximately 800-1,000 RMB per ton. With Brent already jumping from the $70 range to $89, chemical fiber raw material costs will face upward pressure of thousands of RMB per ton. More critically, global crude and refined product inventories are at five-year lows, and U.S. commercial crude inventories rose by 17.423 million barrels in a single week, while the Strategic Petroleum Reserve has fallen below 300 million barrels, leaving limited buffer. Low inventories mean that prices are highly sensitive to supply disruptions, and any fluctuation in geopolitical negotiations will trigger sharp volatility.
Industry Impact
On the demand side, OPEC and the IEA have successively downgraded their global crude demand growth forecasts for 2026. The U.S. summer driving season is nearing its end, and refinery utilization rates will decline from September to October, weakening demand and capping upward price momentum. This suggests that crude prices will remain high and volatile in the short term due to geopolitical support, but once the supply gap narrows in Q4, prices are likely to correct downward. For textile enterprises, this "rise first, fall later" trajectory makes the timing of raw material procurement crucial.
Specifically, polyester and nylon are the categories most directly affected by oil prices. Higher crude prices raise the costs of PX (paraxylene) and PTA (purified terephthalic acid), which then transmit to polyester filament and staple fiber. Downstream weaving mills are generally in the transition period from off-season to peak season, with order volumes not yet significantly expanded and raw material inventories low. If oil prices remain elevated, chemical fiber producers will likely raise prices. Weaving mills will face a dilemma: either accept higher prices and compress their own margins, or delay purchases and risk supply disruptions. This predicament will be particularly acute over the next two months.
Practical Recommendations
In the face of high oil price volatility and weakening demand in Q4, all segments of the textile supply chain need to adopt differentiated strategies.
For Procurement Teams - If chemical fiber raw material inventory is below 15 days of usage, consider replenishing in batches when oil prices fall below $80 per barrel, locking in relatively low prices and avoiding supply disruption risks from geopolitical escalation. - Monitor the progress of restoring traffic through the Strait of Hormuz and the direction of U.S.-Iran negotiations. If traffic recovers to more than 30%, oil prices are likely to fall rapidly, so large-scale procurement can be deferred. - Sign short-term floating price contracts with chemical fiber suppliers to shift part of the cost volatility to upstream, while including price adjustment clauses to cope with sharp fluctuations.
For Foreign Trade Enterprises - For orders denominated in U.S. dollars, be alert to rising freight and insurance costs due to higher oil prices. It is advisable to include an energy surcharge clause in quotations or lock in freight rates with forwarders in advance. - For orders destined for the Middle East or Europe, assess the impact of geopolitical conflicts on delivery times, extend buffer periods appropriately, and clearly specify force majeure clauses in contracts. - Use futures tools for hedging. When oil prices are high, sell crude or PTA futures to lock in raw material costs, but strictly control position sizes to avoid one-way speculation.
In summary, the current crude market pattern of "geopolitics sets the upside, supply-demand supports the floor" presents both challenges and opportunities for the textile supply chain. During the short-term high-volatility period, enterprises should prioritize cost control and inventory management, avoiding blindly chasing price increases. When demand weakens and oil prices fall in Q4, they can then replenish inventories and take orders. The pace of restoring traffic through the Strait of Hormuz will be the core indicator for textile raw material price trends in the coming months.