The geopolitical tensions triggered by the U.S.–Iran conflict in late February 2026-following military actions involving Israel and the United States against Iran-have now entered their third week. The focal point of the disruption lies in the Strait of Hormuz, one of the most critical chokepoints for global crude oil transportation. Threats to tanker traffic and maritime disruptions have significantly constrained the flow of roughly 20 million barrels per day of crude oil and LNG shipments.
As a result, international oil prices briefly surged above USD 119/bbl (Brent and WTI) before easing, though they remain volatile at elevated levels, with Brent currently fluctuating roughly between USD 87–103/bbl. Through the crude oil–naphtha–aromatics cost chain, the geopolitical shock has rapidly transmitted into China's aromatics market, pushing up prices of key feedstocks such as benzene and toluene.
Market data show that benzene prices in China rose sharply from CNY 6,122/ton in early March to CNY 8,501/ton by mid-March, representing a 39% increase. Toluene followed a similar trajectory, climbing from CNY 5,425/ton to CNY 7,870/ton, marking a 45% gain. As essential upstream feedstocks for MDI and TDI production, the rapid price escalation is increasing cost pressure across the polyurethane value chain.
Geopolitical Disruptions Transmit Through the Aromatics Cost Chain
The disruption to crude flows through the Strait of Hormuz has tightened Middle Eastern exports, driving up prices for naphtha and reforming feedstocks across Asia. Benzene and toluene, which rely heavily on refinery catalytic reforming and steam cracking routes for over 70% of their production, are therefore highly sensitive to crude oil movements.
Since early March, Asian benzene spot markets have surged, while China's derivatives markets have seen consecutive price limit increases, strengthening cost support for benzene and downstream products such as styrene. Although toluene belongs to the same BTX (benzene–toluene–xylene) aromatics family, structural differences in China's domestic supply have created a slightly different market dynamic.
While toluene prices have followed benzene upward, they have shown somewhat stronger buffering capacity due to ample domestic supply. Nevertheless, the timing of the price surge closely coincided with the peak shipping disruptions in the Strait of Hormuz, highlighting how geopolitical risk premiums have already been transmitted across the aromatics and polyurethane feedstock chain.