China, Japan, South Korea Adjust Petrochemicals as US‑Iran Conflict Shuts Strait of Hormuz

Escalating hostilities between the United States and Iran have led to repeated closures of the Strait of Hormuz, pushing Brent crude futures above $90 a barrel and disrupting tanker traffic.

The shutdown has created a shortage of naphtha, a key feedstock for Japan and South Korea's petrochemical sectors. Both countries have had to cut naphtha imports to roughly 70% of the previous year’s levels and are seeking alternative supplies from the United States and other regions, while curbing petrochemical exports.

China, which holds the largest petrochemical capacity in Asia, has maintained stable output by switching to alternative feedstocks such as ethane derived from natural gas, raising Q2 ethylene production by 12% and increasing exports of polyethylene and polypropylene. Domestic naphtha production also rose, helping to offset higher global prices.

The broader conflict threatens regional shipping and water security. Reports cite oil‑tanker explosions in the Strait, a vessel struck by an unknown projectile in Omani waters, and attacks on a Kuwaiti desalination plant that supplies drinking water to Gulf states.