Strait of Hormuz Risks Escalate: How Textile Trade Supply Chains Are Affected

The Strait of Hormuz carries about one-third of global LNG and more than one-fifth of crude oil trade, and its navigability directly affects the petrochemical supply chain. For the textile industry, the tension in this waterway is not just distant geopolitical news—it can trigger ripple effects on the import of chemical fiber raw materials, fluctuations in freight rates, and the reliability of order delivery. On August 19, the UAE announced the suspension of all trade, commercial exchanges, and financial transactions with Iran, with no timeline for resumption. A day earlier, the UAE Ministry of Defense detected two ballistic missiles, one landing outside territorial waters and the other within them, raising security alerts. Earlier, two oil tankers of the Abu Dhabi National Oil Company were attacked while transiting the Strait, and Emirati vessels have faced multiple incidents in these waters. The Strait of Hormuz is a critical chokepoint connecting the Persian Gulf to global markets, with large volumes of crude oil, refined products, and petrochemicals passing through to Asia and Europe. Current transit order has been clearly disrupted, with some shipowners choosing to reroute or delay passages, pushing up insurance costs and reducing the efficiency of energy cargo flows. On the diplomatic front, a memorandum of understanding in June had planned up to 60 days of multi-topic negotiations to ease tensions and restore shipping, but subsequent differences stalled the talks. Iran has signaled that the strait will only reopen when its demands—including lifting port blockades, oil-related restrictions, asset handling, and ceasing military confrontation—are met. For the textile industry, the most immediate impact is on the supply and cost of chemical fiber raw materials. The Middle East is a vital source of petrochemical feedstocks for textile powerhouses like China and India, with ethylene glycol and PX heavily reliant on Hormuz shipping. Disruptions or higher transport costs could raise production costs for PTA and polyester filaments, eventually transmitting to fabrics and garments. Shipping market uncertainty is equally concerning. Rerouting via the Cape of Good Hope or alternative lanes will significantly extend transit times, increase fuel consumption and insurance premiums, ultimately reflecting in higher freight rates and longer lead times. Exporters dependent on Middle East routes, especially those trading with the UAE and Iran, face risks of interrupted settlements and deliveries, forcing long-established partnerships to be shelved. The impact is not one-sided. The UAE, a key transshipment hub, and its trade suspension with Iran will affect not only bilateral businesses but also textile trade transiting through Dubai to neighboring markets. Some orders may need to be rerouted or canceled, testing supply chain flexibility. ### For Sourcing Managers - Re-evaluate sources of chemical fiber raw materials, add backup suppliers, and reduce dependence on a single shipping route. - Monitor fluctuations in freight and insurance costs, and include adjustment mechanisms and force majeure clauses in contracts to avoid cost overruns. - Maintain close communication with freight forwarders to stay updated on route conditions, and book space or adjust shipment plans in advance when necessary. ### For Foreign Trade Enterprises - Conduct risk assessments on orders involving the Middle East, especially Iran and the UAE, evaluate the feasibility of payment recovery and delivery, and seek alternative markets if needed. - Track diplomatic progress and use futures or forward contracts to hedge against raw material price volatility and stabilize cost expectations. - Establish contingency logistics plans with alternative routes to ensure order fulfillment under extreme scenarios. The situation remains fluid, and whether diplomatic channels can restart is key to restoring navigation through the strait. Textile companies should incorporate geopolitical risks into daily operations and adopt flexible strategies to mitigate potential supply chain disruptions.