Crude oil surges on renewed war premium; will it reverse the polymer slump?

The renewed geopolitical tensions have pushed Brent crude back into the mid-$80s/bbl, rapidly rebuilding some of the war-risk premium that had evaporated after June’s ceasefire hopes. This has also helped buoy the sentiment recently in polymer markets, where prices have been on a downturn for the past couple of months. After months of sluggish demand, ample supplies, and relentless price erosion, sellers are seizing on higher feedstock costs to argue that the market has reached its bottom.

Buyers, however, remain unconvinced, pointing to weak end-user demand and comfortable inventories as reasons why any rebound may prove difficult to sustain.

How much of the previous war premium remains in PP, PE and PVC markets?

The comparison between pre-war (W9) and current (W28) levels reveals how much of the original war premium has survived after weeks of market correction.

While Brent crude has only recently regained part of its geopolitical premium following the renewed escalation in the Middle East, most polymer markets had already surrendered a large portion of the gains they posted during the March-April spike. Weeks of sluggish demand, ample availability and intense competition among sellers steadily eroded those earlier increases, leaving only a fraction of the original premium intact across most polymer markets.

ChemOrbis Price Index via ChemOrbis Market Snapshot: Comparison of current price levels with pre-war levels

Product	Transaction Type / Product/Territory	Change % Pre-war (W9) vs Current (W28)
Feedstocks	Crude Oil - Brent - Europe	17%
	Crude Oil - WTI (Nymex) - US	18%
	Naphtha - CFR Japan - Asia	20%
	Naphtha - CIF NWE - Europe	16%
	Natural Gas - Dutch TTF - Europe	55%
	Natural Gas - Henry Hub - US	0%
HDPE Film	Import - China	8%
	Import - Southeast Asia	11%
	Import - India	30%
	Import - Türkiye	5%
	Import - East Africa	24%
	Import - East Med	23%
	Import - Egypt	8%
	Import - North Africa	16%
	Import - UAE	25%
	Import - West Africa	8%
	Local Spot - Italy	12%
	Local Spot - Northwest Europe	20%
	Local Spot - Saudi Arabia	19%
PPH	Raffia/Inj. – Import - China	20%
	Raffia/Inj. – Import - Southeast Asia	16%
	Raffia/Inj. – Import - India	28%
	Raffia – Import - Türkiye	15%
	Raffia – Import - Egypt	12%
	Raffia/Inj. – Import - East Africa	25%
	Raffia/Inj. – Import - East Med	25%
	Raffia/Inj. – Import - North Africa	25%
	Raffia/Inj. – Import - UAE	21%
	Raffia/Inj. – Import - Vietnam	18%
	Raffia/Inj. – Import - West Africa	25%
	Inj. – Local Spot - Italy	26%
	Inj. – Local Spot - Northwest Europe	21%
	Raffia/Inj. – Local Spot - Saudi Arabia	50%
SPVC K67-68	Import - China	0%
	Import - Southeast Asia	-4%
	Import - Türkiye	-1%
	Import - Egypt	2%
	Import - India	4%
	Local Spot - Italy	31%
	Local Spot - Northwest Europe	35%

This week’s rebound in crude therefore comes at a time when polymer markets are already trading much closer to their pre-war levels. The question now is whether a sustained recovery in oil prices can prevent the remaining premium from eroding further, or even allow sellers to rebuild some of the ground they have lost over the past several weeks.

This is not the same rally as March-April

Unlike the previous surge, the current rally has so far been driven primarily by renewed geopolitical risk rather than actual disruptions to petrochemical supply.

The March-April spike was fueled not only by soaring energy prices but also by concerns over regional supply. Several Middle Eastern petrochemical facilities were affected by missile attacks, while logistical uncertainties hampered exports from the eastern Arabian Peninsula, raising fears of tighter product availability and amplifying the bullish impact on polymers.

The current situation is different. Although oil has rallied sharply on renewed war-risk concerns, regional petrochemical production remains largely intact, export flows have so far continued without major interruptions, and global polymer supply remains more than sufficient to satisfy demand. As a result, buyers see little justification for a broad-based recovery driven solely by higher crude prices.

Sellers see a floor, buyers expect stabilization

After months of struggling to move material, sellers have become increasingly confident that higher feedstock costs will help defend prices. Across several markets, they have started testing price increases or signaling firmer offers for upcoming negotiations, arguing that margins have become unsustainably thin.

Buyers, however, continue to approach the market cautiously. While acknowledging higher upstream costs, they argue that weak end-user demand has not materially improved and inventories remain comfortable. Many, therefore, believe the most likely outcome is not a sharp rebound but a stabilization of prices around current levels.

Persistent oil strength could shift the balance

Whether the recent oil rally develops into a genuine turning point for polymers will largely depend on how long the renewed war premium lasts.

If crude retreats once geopolitical tensions ease, polymer markets are likely to refocus on their prevailing fundamentals of ample supply and subdued demand. However, should Brent remain elevated for an extended period, sellers may finally gain the cost support they have lacked throughout the recent downturn. While higher feedstock costs alone are unlikely to trigger a broad-based rally, they could prove sufficient to halt the slide and support modest price increases, marking the first meaningful stabilization in polymer markets after months of persistent weakness.