The price of war is rising

Economy Service

US-Israel joint attacks targeting Iran have triggered a war that has created a state of emergency in the Gulf. In addition to the closure of the Strait of Hormuz, trade has ground to a halt in Gulf countries allied with the US that have been struck by Iran. A chain reaction of economic crises is looming for both the world and Turkey. Experts highlight that disruptions in the supply of products serving as raw materials for both the energy sector and numerous other industries could have adverse effects on economies.

The threat posed to the world by US-Israeli attacks is once again highlighted by analyses. The “Hormuz Crisis” assessment note published by the Turkish Economic Policies Research Foundation (TEPAV) revealed that the geopolitical deadlock in the region harbours a far deeper economic threat than previously thought. The report, authored by TEPAV Energy Director Mühdan Sağlam and Researcher Günbey Korkmaz, emphasised that the Strait of Hormuz is not only an energy corridor but also a critical supply artery upon which the entire industrial economy depends.

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1- ENERGY IS NOT THE ONLY SECTOR AFFECTED

With the closure of the Strait of Hormuz, through which approximately 20 per cent of the world’s oil flows, or in other words, around 15 million barrels of crude oil and approximately 6 million barrels of petroleum products daily, oil prices have seen a speculative surge to the $85–$120 range. Potential alternatives to the crisis also fail to match the Strait of Hormuz’s capacity. The combined daily capacity of Saudi Arabia’s Yanbu and the UAE’s Fujairah pipelines remains at around 7 million barrels. According to International Energy Agency (IEA) data, even if these pipelines were operating at full capacity, they would not be sufficient to close the supply gap. In recent days, the IEA launched a massive release of 400 million barrels of reserves with the participation of 32 member countries. This move, in which Turkey also participated by releasing 11.6 million barrels of oil, did not bring about the expected relief. In a market already subject to speculative pricing, this move was interpreted as a sign that ‘the war will drag on’. Thirty per cent of LPG transported by sea is dependent on the Straits. Analyses suggest that LPG supply is expected to fall by 1 million barrels by the end of April. Congestion in the Bosphorus, which serves as the backbone of global LNG (liquefied natural gas) trade, has led to speculative pricing in Europe. Gas prices surged by 60 per cent in a week following Qatar’s declaration of force majeure, exceeding 50 euros per megawatt hour last week.

2- IT WILL SHAKE THE TEXTILE INDUSTRY

The war has also triggered a petrochemical earthquake. The disruption to the Gulf Cooperation Council countries’ annual petrochemical exports, totalling 74.8 million tonnes, has placed all sectors, from plastic packaging to automotive parts, and from textiles to electronics, under cost pressure. Prices for naphtha, the main feedstock for petrochemical plants, have already surpassed the five-year high of $90 due to supply constraints. There is also a crisis in polyethylene and polypropylene, key raw materials for industry. The Middle East accounts for 43 per cent of global polyethylene exports. A full 84 per cent of this massive capacity is directly dependent on the Strait of Hormuz. At the beginning of March, polyethylene and polypropylene prices rose by over $200. This is expected to have a serious impact on industries ranging from textiles to plastics. It is not just these sectors; monoethylene glycol, the raw material for products such as polyester fibre, has also been hit. This product, which is the primary raw material for polyester fibre and PET production, is of vital importance to Turkey’s strong textile, ready-to-wear and packaging industries. The report noted: “While Turkey’s annual MEG imports stand at approximately $700 to $900 million, around 35–40 per cent of this trade is sourced from Gulf producers. A potential logistical disruption in Hormuz could increase the cost of this raw material, creating cost pressures in polyester production.” Methanol, a key input for thousands of products ranging from plastic resins to paint, is also one of the crisis’s vulnerable links. The Gulf countries’ annual petrochemical exports of 74.8 million tonnes are failing to reach Asia and Europe. Methanol, of which Iran alone exports over 9 million tonnes annually, gained 10.64 per cent in value in the Chinese markets in a single day. It is estimated that all of this will lead to significant cost increases.

3- HELIUM IN HEALTHCARE, ASPHALT IN CONSTRUCTION

One of the sectors hit by the crisis was healthcare. With Qatar suspending production, which accounts for 63 million cubic metres annually that is equivalent to one-third of global helium production, spot prices have doubled. There is no substitute for helium, which is of unique value for cooling Magnetic Resonance (MR) machines in hospitals. Another critical industrial product transported via the Strait of Hormuz is aluminium. Plants in the UAE, Bahrain and Qatar, which account for around 10 per cent of global aluminium production, have halted operations. The report states: “A disruption in the Strait of Hormuz would create a supply risk that could affect not only the energy and petrochemical markets but also infrastructure and construction projects, particularly in developing countries.” The Gulf’s 40 per cent share of bitumen (asphalt) exports, a cornerstone of infrastructure, is also expected to affect the construction sector.

4- FERTILISER COSTS THREATEN PRODUCTION

The Gulf region, which dominates 40 per cent of global nitrogen fertiliser trade thanks to its cheap natural gas advantage, has seen supply cut significantly following the closure of the Strait of Hormuz. In the short period between 28 February and 9 March, global fertiliser prices rose by 38 per cent. In international markets, the price of urea surged to $583 per tonne, marking a monthly increase of 29 per cent. In New Orleans, one of the US’s main import hubs, prices climbed from $516 to $683. The closure of the Strait implies a 33 per cent tightening of the global fertiliser supply chain, whilst during this period, sulphur supply is expected to fall by 44 per cent and urea supply by 30 per cent. Turkey is directly feeling the effects of the supply crisis due to its annual fertiliser consumption of 6–7 million tonnes and, in particular, its high import dependency on nitrogen fertilisers. Gulf producers account for 15–25 per cent of the country’s nitrogen fertiliser imports. Measures such as restrictions on urea exports and tax incentives for imports may not provide a solution to the costs facing this vulnerable sector. Turkey’s agricultural sector contracted by 8.8 per cent last year. Whilst agricultural costs threaten production, new crises carry the risk of spilling over from the fields to the dinner table.

5- SHIPPING COSTS TO HIT APPLIANCES

Another impact of the crisis is evident in maritime transport, which underpins global trade. Following the declaration of the Strait of Hormuz as a high-risk zone, war risk insurance premiums in tanker shipping have risen sharply. Increases, including the ‘war risk premiums’ added to insurance, have reached levels of 1,200 per cent. It is reported that daily spot freight rates for LNG tankers have risen by approximately 600 per cent in a short period, reaching $300,000. The diversion of ships to alternative and much longer routes, such as the Cape of Good Hope instead of the Strait of Hormuz, has led to an operational bottleneck in the logistics chain. These fluctuations in freight rates are also increasing Turkey’s foreign trade costs due to extended delivery times. The report, which includes TEPAV’s assessments, contains the warning: “Rising freight costs and extended delivery times could complicate delivery planning, particularly in sectors such as textiles, the automotive supply industry, machinery and white goods.” These sectors, in particular, account for significant portions of Turkey’s exports.

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INDUSTRIAL PRODUCTION IN TURKEY UNDER THREAT

Turkey is heavily reliant on Gulf countries for aluminium and plastic raw materials, which are the cornerstones of industrial production. Data shows that Turkey imports $3 billion worth of raw materials from this region annually. A disruption in this raw material flow would drive up costs in the white goods and automotive sectors. According to the analysis, the Kirkuk-Yumurtalık Pipeline, which accounts for 20 per cent of oil imports, is set to begin operating at full capacity as of 13 March 2026, thereby reducing Turkey’s reliance on tankers via the Strait of Hormuz. However, every $10 increase in oil prices is estimated to add $4.5–5 billion to the annual current account deficit. Dependence on helium supplies, which are indispensable for high-tech products, threatens production, whilst the raw materials crisis will significantly extend delivery times in the ready-to-wear sector, one of the country’s strongest export categories. According to the analysis, the country could secure close-range supplies for the European market.

Note: This article is translated from the original article titled Savaşın faturası kabarıyor, published in BirGün newspaper on March 17, 2026.