The Strait of Hormuz, through which about one-third of global LNG and over one-fifth of seaborne crude oil passes, is now seeing its navigational order directly disrupted by regional conflict. On August 19, the UAE announced a suspension of all trade and financial transactions with Iran, and the next day reported ballistic missiles falling into its territorial waters—for global supply chains dependent on Middle Eastern chemical fiber and finished textiles, this means risk premiums are transmitting from shipping to procurement.
Background
The trade suspension between the UAE and Iran is not an isolated incident. Two oil tankers of the Abu Dhabi National Oil Company were previously attacked in the Strait, making shipowners and cargo owners wary of transit safety. In June, parties reached a memorandum of understanding to ease tensions through negotiations lasting up to 60 days, but diplomatic progress subsequently stalled. Iran has made clear that the strait will only reopen after its demands—including lifting port blockades, oil restrictions, and asset disposals—are met.
For the textile industry, the Middle East is not only a key source of crude oil and natural gas, but also a critical transit point for chemical fiber raw materials (such as PTA and MEG) and textiles. Jebel Ali Port in the UAE is the largest transshipment hub in the Middle East, with large volumes of Chinese fabrics and garments flowing through it to Africa and Europe. Now the trade halt between the two countries means cargo clearance, fund settlement, and logistics arrangements on this transshipment route face uncertainty.
Industry Impact
Rising shipping risks are directly pushing up freight and insurance costs. According to industry public data, after the missile incident on August 18, tanker freight rates from the Persian Gulf to Asia have risen by about 15%, and war risk surcharges have jumped more than 30% in a single week on some carriers' quotes. For textile export contracts on FOB terms, the buyer's ocean freight cost increases, potentially triggering renegotiation or order delays.
A deeper impact is on supply chain continuity. Iran is an important chemical fiber producer in the region, and although its polyester and acrylic capacity is smaller than China's, the volume transshipped through the UAE is not negligible. After the trade suspension, regional supply of Iranian polyester staple fiber and acrylic yarn has shown gaps, with Turkish and Indian suppliers already raising quotes by about 5% to 8%. For weaving mills relying on low-cost Middle Eastern raw materials, this means sudden cost pressure.
Meanwhile, buyers in Europe and Africa are reassessing delivery lead times. Container routes that previously passed through the Strait of Hormuz, if rerouted via the Cape of Good Hope, would extend transit by 10 to 15 days, directly disrupting autumn/winter fabric launch plans. Some brands have already asked suppliers for alternative logistics solutions, even considering shifting orders to Southeast Asia to avoid geopolitical risks.