Rising oil prices trigger a multiplier effect as Middle Eastern conflicts spread to textiles and beverages

Recently, Yemen’s Houthi forces launched multiple ballistic missiles toward southern Israel. As the Houthis entered the conflict, the risk to the Strait of Mandeb, a critical shipping lane in the Red Sea, also significantly increased. Analysts warn that the impact of this conflict on the oil market is continuously expanding; if it persists for several more weeks, even if the situation later eases, the supply recovery may not keep pace in time, and global oil inventories could be substantially depleted. The shock to oil prices will not remain confined to the energy sector but will be transmitted downstream through basic raw materials such as naphtha, eventually entering the petrochemical industry chain and permeating nearly all consumer products. The founder of energy consulting firm KSG pointed out that because a large portion of global goods rely on plastics for packaging and transportation, the range of affected everyday products will be very broad. Shortages and rising prices of petrochemical products will gradually spread to various sectors including textiles, detergents, food, and beverages. Schwartz, co-founder of supply chain analysis company Altana, stated that the impact on the petrochemical market has a “multiplier effect”—meaning that an increase in costs is amplified layer by layer throughout the industry chain. Altana’s data show that the Gulf region transports approximately $733 billion worth of petrochemical raw materials, intermediates, and finished products, which will further influence downstream goods totaling about $3.8 trillion, from toothpaste to towels, covering nearly all categories of daily consumer goods. (CCTV Finance)