Trump announced on Wednesday, a continuation of the two-week ceasefire indefinitely but the US would maintain its blockade of shipping at and around the Hormuz Strait. Iran responded by refusing to attend further talks until the US blockade is lifted. Trump later claimed that Washington would not lift the blockade, because “if we do that, there can never be a Deal with Iran, unless we blow up the rest of their Country, their leaders included!” Iran promised to “reveal new cards on the battlefield.”
Alastair Crooke noted in his article here, Markets prematurely may celebrate, but the next phase likely will be more war said US Constitutional lawyer, Robert Barnes:
”Trump began exhibiting signs of early dementia in September 2025 … He frequently confabulates, he routinely loses his temper and unleashes screaming rants and he is incapable of doing critical thinking. And – according to Barnes, in this state – Trump genuinely believes that the U.S. has vanquished Iran and does not comprehend the massive economic damage that the closure of the Strait of Hormuz is doing to the global economy”.
Barnes says Trump’s delirium that Iran is at the point of capitulation reflects his impaired mental state, an impairment of understanding ‘reality’ which may be true or not. It is difficult make an assessment either way. However, the Middle East conflict has triggered what IEA chief, Fatih Birol has called “the biggest” energy crisis in history.
The oil price is just the tip of the iceberg that could cause major problems across the planet. The surge in oil prices caused by the war on Iran has grabbed most of the headlines. For many observers, the severity of the crisis is measurable in the daily changes in the Brent price. But some analysts are pointing to emerging stress in fertilizer markets. But beneath these familiar markers, several less visible cases are more systemic:
Naphtha, a feedstock for petrochemicals, is a classic behind-the-scenes product. Rarely in the headlines, naphtha is critical for the production of modern technology, not to mention a whole host of everyday plastics, car parts, medical supplies, packaging, and much more. Naphtha is the base of the petrochemical supply chain, where it can wreak havoc if it’s not in free supply.
Naphtha is a liquid hydrocarbon mixture derived from the distillation of crude oil. It is then “cracked” at extreme temperatures to extract ethylene and propylene, which is upstream from a slew of chemical processes that produce the high-purity chemicals, solvents, and plastics that are used in numerous industries, including supporting inputs in semiconductor manufacturing. Because naphtha is not a core material input itself, its role is often overlooked.
Unsurprisingly, naphtha generally exhibits a strong positive price correlation with Brent crude. It is a refinery product, so crude costs are an important driver of pricing. However, its price can diverge meaningfully because it is primarily used in petrochemicals and not simply as a fuel. Naphtha supply disruptions have already made themselves felt in parts of Asia, even causing shortages of plastic bags in South Korea. Incidentally, South Korea has purchased Russian naphtha for the first time in four years.
Several large petrochemical companies, such as LG Chem and Lotte Chemical, are having to cut production or shut cracking facilities due to feedstock shortages. This has disrupted supplies of plastics and packaging, impacting products from consumer goods to medical supplies.
For Japan, the disruption to the flow of naphtha is arguably the most pressing economic fallout from the crisis in the Middle East. Japan relies on 60% of its naphtha from overseas. The Middle East is responsible for over 70% of these imports, according to the Japan Petrochemical Industry Association. The 40% of Japan’s naphtha that comes from domestic refineries isn’t immune to problems in the Middle East as 90% of the oil these refineries use comes from the same region.
Diesel is a middle distillate fuel, meaning that it is heavier than gasoline but lighter than fuel oil. It is called “the fuel of the real economy.” It powers all the heavy transport equipment: trucks, ships, construction, mining, agriculture. Of particular concern is that diesel prices rise faster than gasoline in nearly every energy crisis. Because it is a critical heavy-transport fuel it is not price-sensitive as diesel consumers will keep buying even at higher prices. Also, it is much harder to boost diesel refining quickly.
Refineries generally operate at high utilisation and have inflexible configurations, limiting their ability to respond quickly to demand surges. Because diesel is the fuel for the “real economy,” price spikes are broadly inflationary. According to BloombergNEF, diesel at $5 per gallon in the US could increase prices to consumers by 35%. Diesel cost an average of $5.61/gallon nationwide recently, according to the American Automobile Association. That is $2 above the average on the same date last year and 63 cents more than a month earlier.
Diesel prices have also surged across Europe. Analysts are now warning of potential shortages of both jet fuel and diesel this summer. These two fuels are often grouped together as middle distillates and sometimes are substituted or blended.
Aluminium has become a major crisis in the markets that could reverberate across numerous sectors of the global economy. Consultancy, Wood Mackenzie estimates that the global market is facing a supply deficit of up to 4 million metric tons this year, which would be the largest in over 25 years. JPMorgan has warned that the global aluminium market has entered a supply “black hole.”
Prices are forecast to exceed $4,000 per tonne. For comparison, the long-term “normal” range is $1,500-$2,500 per tonne. The majority of aluminium producers in the Gulf, which account for around 9% of global supply, have been unable to make shipments to world markets. Meanwhile, a missile strike last month damaged the Al Taweelah smelter operated by Emirates Global Aluminium. Repairs will reportedly take up to a year.
As smelters consume stocks of raw materials, production shutdowns are likely. But shutting down an aluminium smelter isn’t the same thing as turning off an appliance and turning it back on with the flip of a switch. Smelters run around-the-clock at extremely high temperatures. If they are shut down, the molten metal solidifies and damages the equipment. Restarting them is extremely costly and technically challenging and sometimes entails a full rebuild.
Western manufacturers are bearing the brunt of the crisis, made worse by implementing their own countries’ destructive policies. China and Russia are among the world’s main sources of aluminium but both have been removed from Western markets because of tariffs and sanctions.
Crack spreads are the gap between what a refiner pays for crude oil and the price at which it sells the finished product; the word describes the refining process of “cracking” large hydrocarbon molecules into smaller ones (gasoline, diesel, naphtha, etc.) A normal crack spread costing is between $10 and $20, although it can vary by product and region. What we are seeing now is crack spreads over $50. This means refined fuels are becoming more valuable relative to crude oil. This will show up in naphtha and diesel as time goes by, and in gasoline prices fairly quickly. Crack spreads therefore provide a useful indicator of fuel-related cost pressures faced by consumers.
Meanwhile, there is a windfall for refiners. In crises like this, pricing power shifts to the most capacity-constrained stage in the system, where output cannot be easily expanded. In this case, and often in oil markets, it is at the refining stage.
Helium is a by-product of natural gas processing and is a small market that punches well above its weight. Helium is essential in the high-tech product world. It has important uses in chip making for which there is no easy substitute. Currently, the global supply of helium is significantly disrupted and reports of rationing are already emerging. The war has thrown a wrench in both the production and transportation of helium.
Supply chains for high-tech goods are already feeling the effects. If dislocations continue, this could start to noticeably interfere with production of goods such as electronics, automobiles, and even smartphones.
Helium production is highly concentrated in certain countries. Qatar, a large natural gas supplier, produces nearly a third of global supply, according to the US Geological Survey. However, the Ras Laffan Industrial City, the single largest helium production site in the world, sustained damage from a missile in early March. The Qatari government estimates that it will take up to five years to fully repair the site.
While shippers of some goods have diverted vessels around the Cape of Good Hope, a much longer but entirely unencumbered route, this is not as viable for helium, which is transported in specialised cryogenic containers. During long trips, helium inevitably heats up and “boils off.”
Sulphur disruption in fertilizer markets have garnered a lot of attention but less focus has been on the major feedstock components of fertilizer: sulphur. Called the “king of chemicals,” sulphur is a by-product of oil and gas refining. It’s another of the vastly underappreciated inputs that keep things running and keep food plentiful across the globe.
Once converted into sulphuric acid, it is used in fertilizers and metal processing, as well as in many pharmaceuticals.
The Gulf accounts for roughly 45% of global supply, which means the disruption is already having effects in both agriculture and metals. Compounding the problem is the fact that sulphuric acid isn’t easily replaced or immediately substitutable. Another vulnerability is that it is not stockpiled heavily, so when flows stop trouble can arise quite quickly. This sends consumers scrambling for expensive spot supply, all of which eventually shows up in food price inflation.
Sulphur prices have moved sharply higher since the war on Iran began, and now countries are taking measures to insulate their own economies. Türkiye has announced a ban on sulphur exports, while India is also reportedly considering export restrictions.
The global economy is as fragile as it is complex. As analyst Zoltan Pozsar claims, “global supply chains work only in peacetime, but not when the world is at war, be it a hot war or an economic war.” In 2026 there are both. The confluence of multiple failures at key chokepoints could trigger cascades of crises that would inflict significant and enduring pain across the economy, increasing steadily in the coming months. Nobody thinks much about naphtha or sulphur when the world is operating normally. These are but a few of the many hidden inputs which rely on oil and its derivatives. Fuels and feed stocks are the immediate visible products which, in normal times, keep the world running smoothly but their gradual absence quickly builds into a crisis that, at first is unnoticed, as adjustments in prices, stocks and supplies operate incrementally and compound over time. Sources
The failure of the United States and Israel to defeat Iran after nearly 40 days of incessant bombing https://forumgeopolitica.com/article/the-iran-war-as-an-ete-empire-terminating-event
Hidden supply chain effects https://www.rt.com/business/638775-hidden-supply-chains-breaking/
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