When oil prices rise, most headlines focus on airlines and gasoline. However, the real economic impact goes much further. Higher energy costs and shipping disruptions are hitting industries that keep supply chains running, like fertilisers, petrochemical feedstocks, packaging materials, food, and beyond. The U.S.-Iran war has not only shrunk crude supply but also upended logistics.
It is natural for businesses to save resources to prepare for uncertain times. Protecting cash flow makes sense, but cutting costs too quickly can cause problems. Companies should focus on building resilience through data-driven planning.
Editor’s note: This article is the second of a four-part series in which we do not attempt to make geo- or even political comments about current events but rather focus on how they impact global businesses financially. To not miss out on real-life solutions and tactical tips on mitigating obnoxious decisions, subscribe to our newsletter today!
What this series will cover:
- Industries that are impacted other than airlines
- Ensuring financial resilience without cutting unnecessary costs
- Master “what-if” scenarios and real-time visibility with Cloud EPM
From crude oil to everything else
Imagine the oil shock like a stone dropped in water. The first impact is on crude oil and gasoline. The next effects hit diesel, petrochemical feedstocks, fertiliser inputs, shipping, and insurance. Further out, industries like food, packaging, electronics, and household goods also feel the impact.
Fertilisers (Urea/Ammonia): The hidden chokepoint behind food prices
If there is one ‘second wave’ market to watch, it is nitrogen fertiliser. This market is affected by natural gas prices, shipping routes, and the timing of planting seasons.
Why fertilisers are so exposed
- A large share of the global fertiliser trade transits through Hormuz, meaning the same chokepoint that constrains oil also constrains crop nutrients.
- Nitrogen fertilisers are gas-based. Ammonia and urea depend heavily on natural gas as a feedstock and energy input, linking fertiliser costs to gas disruptions and LNG outages. [1]
- Timing is crucial. UN News reports that disruptions during spring buying and application periods can reduce fertiliser use, lower crop yields and lead to higher food prices months later. [2]
Then we have diesel and transport fuel, which are essential for farming, irrigation, fishing, and distribution. They power trucks, farm equipment, construction machines, and fishing boats. As diesel prices rise, costs quickly increase for goods that are harvested, manufactured, and shipped, including groceries.
Manufacturing: Petrochemicals, plastics, and the feedstock squeeze
If fertiliser is the ‘second wave’ for agriculture, petrochemicals are the ‘second wave’ for industry. Plastics and resins are key components of products such as automotive parts, toys, packaging, construction materials, appliances, and electronic housings.
A major share of global chemical production depends on refined feedstocks, especially naphtha and LPG. The IEA notes that plunging LPG and naphtha supplies are already forcing petrochemical plants to curb polymer production, worsening the loss of Gulf petrochemical flows [3]. In Asia, the naphtha refining margin, which surged sharply from pre-conflict levels, is an indicator of extreme feedstock scarcity. [4]
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How manufacturers are affected:
- Resin and polymer prices rise, pressuring consumer goods, automotive, and construction supply chains. Reuters cites that plastics are rising to roughly multi-year highs, with producers passing higher costs downstream. [4]
- Production cuts become rational when spreads turn negative. Industry reporting indicates petrochemical plants in Asia and Europe are curtailing operations due to feedstock unavailability and margin compression, especially in naphtha-heavy regions with less flexibility than ethane-rich North America.
- Fewer shipping routes and higher risk costs inflate delivered input prices, even if oil prices fall in the future. However, there is a widening gap between paper oil prices and the real-world costs of physical barrels and refined products, which manufacturers ultimately pay. [5]
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Food & Beverage: The spill-over reaction from the fertiliser shortage and dramatic logistics disruptions
For food and beverage companies, the biggest problem during an oil shock is often the pressure on many inputs:
- Fertiliser, as we already explained in the section above
- Plus, energy + logistics: PBS documents a rapid jump in U.S. gasoline and diesel early in the conflict window (March 2–16). When freight carriers face higher fuel bills, surcharges rise. Retailers, distributors, and manufacturers then see margin pressure or shelf-price increases. [6]
- Plus, packaging: Packaging is a “quiet” cost centre in F&B. It depends on petrochemicals (plastics, films, resins) and energy-intensive chemical chains, which are also heavily disrupted by the halt at the chokepoint.
Fertiliser shocks do not appear in grocery prices right away, but their effects can be strong over a couple of seasons.
This is how oil price swings lead to broader, long-lasting inflation. It raises costs for industries that cannot easily change their inputs, especially when feedstock supplies are limited to certain regions.
Beyond fertilisers and petrochemicals, several additional networks are showing early signs of strain:
- Electronics & semiconductors: UN reports from Asia-Pacific highlight that shortages of helium and specialised gases from Gulf producers can quickly cause problems for semiconductor and advanced electronics production. These materials are hard to replace on short notice, reinforcing the vulnerability of globally interwoven supply chains. [7]
- Healthcare & pharmaceuticals:Although data is still coming in, it is clear that higher diesel and freight costs increase the price of delivering temperature-sensitive goods. Disruptions in the petrochemical industry can also affect plastic medical disposables and packaging, as the costs of key inputs (e.g., PET, polypropylene, PVC, etc.) have soared, mirroring the volatile oil market. [8]
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Pause before making any quick cost cuts
Energy and logistics problems do not improve in a straight line. Even if oil prices fall, war-risk premiums and route changes can keep freight and insurance costs high for some time. This means operational challenges can last long after markets settle down.
It is important to remember that input shortages can lead to hidden downtime. If your packaging resin supplier cannot get materials, or your fertiliser shipment is delayed, you may face not only higher prices but also missed production, stockouts, lost customers, and the need for expensive expedited shipping later.
As a result, businesses often respond by reducing staff, cutting travel, and asking management to take voluntary pay cuts. Protecting liquidity is important, but cutting the wrong expenses first can hurt your operations and make you more vulnerable to the volatility you are trying to avoid.
For starters, consider the following questions:
- Calling All Procurement Managers: How Much You’ve Saved For Your Company?
- Are You Still Handling Invoices the Manual Way? Here’s A Solution
- What’s Holding Businesses Back from Modernising Record-To-Report Processes?
Instead of making broad cuts quickly, companies should use a structured approach by defining three or four different operational scenarios. These should consider not only changing oil prices but also logistics challenges and raw material availability.
Next, set up leading and lagging indicators, along with trigger points (or company rules) that can help you make more objective decisions and respond early during unpredictable times.
Here is an example of a particular scenario.
What if:
- War risk insurance for vessels transiting the Strait of Hormuz stays very expensive (e.g., several % of hull value)
- And/or insurers issue cancellation notices
- So, shipowners and crews avoid the passage even if it is not “officially closed”
Leading indicators:
- War risk premium level quoted for Hormuz transits rises from fractions of a percentage to more than 1% or multi% ranges for some voyages
- Formal cancellation notices from marine insurers / Coverage withdrawn, then reoffered at higher rates
- Shipowners refuse transit even when cover exists because crew safety and route viability deteriorate
Lagging indicators:
- Carrier schedule slips cause missed ETAs on inbound materials and finished goods
- Spot freight and landed cost increases on affected lanes, plus supplier price revisions (with freight/insurance embedded)
- Inventory stress due to depletion or emergency expediting spend
Trigger points:
- Trigger A (cost/insurability): Warrisk premium quotes remain above my company’s tolerance for 14 days, OR I receive any cancellation notice affecting the lane(s).
- Trigger B (capacity behaviour): Two or more priority carriers pause/ suspend Hormuz crossings or reroute services, indicating capacity withdrawal.
Possible outcomes:
If the scenario persists and triggers fire, expect a chain reaction like:
- Route viability declines → fewer owners willing to sail → capacity drops and vessels idle/queue outside the region.
- Transit times lengthen (rerouting, congestion, slower approvals) → leadtime volatility increases.
- Landed costs rise (insurance + freight + delays) → supplier repricing and/or margin compression.
- Higher probability of stockouts for lane-dependent inputs/SKUs.
Decisions that these outcomes enable:
Procurement decisions
- Reconfigure trade terms/control risk, switch Incoterms (e.g., from CIF to FOB) to control routing, insurer selection, and risk terms earlier, rather than inheriting supplier decisions.
- Rebid lanes/dual-source logistics, lock in alternate carriers/ routes before the market fully reprices, rather than paying peak spot rates later.
Operations/ supply planning decisions
- Pull forward critical inbound shipments (where feasible) and selectively increase safety stock for long-lead or single-sourced items (not blanket inventory hoarding).
- Prioritise production allocation for the highest-margin/highest-penalty products if lead times become unreliable
Finance decisions
- Update the cash and working-capital plan; model higher landed costs, inventory buffers, and potential expediting; and proactively adjust credit lines or payment terms (rather than reacting after the squeeze).
Here’s a TL, DR version
The impact of oil volatility is not simply headlining news on every media channel; it has spread across the interconnected global supply chain.
Fertiliser constraints can translate into food inflation months later. Petrochemical feedstock shocks raise costs for packaging, consumer goods, healthcare equipment, automotive parts, toys, construction materials, appliances, and more. Industrial gas and metal disruptions can hit electronics. Shipping risk multiplies costs and delays deliveries.
That’s why the “obvious” reaction, a.k.a., tighten cash flow, must be paired with a smarter solution, leveraging data to stress-test and decide in advance what you and your business will do under each scenario.
The next instalment in this series will be a detailed playbook on maintaining financial resilience. Stay tuned!
Before you touch your headcount or travel budget, you need to know which market signals should actually fire your “Emergency” plan. Download our “What’s Next After Spreadsheets?” Playbook to define your organisation’s objective trigger points.
References
- https://www.global-agriculture.com/crop-nutrition/why-lng-matters-for-urea-production-understanding-the-energy-foundation-of-nitrogen-fertilizers/#:~:text=Urea%20fertilizers%20are%20essential%20for,and%20affordability%20of%20natural%20gas.
- https://news.un.org/en/story/2026/03/1167182
- https://www.iea.org/reports/oil-market-report-march-2026
- https://www.reuters.com/business/energy/asia-refining-margins-rocket-highest-nearly-4-years-hormuz-supply-disruption-2026-03-05/
- https://www.reuters.com/markets/commodities/crude-oil-futures-separate-reality-asia-physical-market-buckles-2026-03-12/
- https://www.pbs.org/newshour/economy/soaring-gas-prices-and-supply-chain-disruptions-drive-up-costs-across-the-economy
- https://news.un.org/en/story/2026/03/1167167
- https://www.thedailystar.net/business/economy/news/war-pain-spreading-fast-across-industries-4142101#:~:text=The%20cost%20of%20resin%20for,of%20uncertainty%2C%E2%80%9D%20said%20Hassan.
