ADB Warns Middle East Conflict to Surge Asia-Pacific Fertiliser, Petrochemical Prices
The Asian Development Bank (ADB) warns that a prolonged Middle East conflict will significantly increase fertiliser and petrochemical prices across Asia-Pacific. This surge, exemplified by rising methanol and urea costs post-airstrikes, threatens the region's food security and manufacturing due to high reliance on Middle Eastern imports. ADB estimates concurrent oil and non-energy price shocks could reduce regional growth by 1.3% and boost inflation by 3.2%, disproportionately affecting lower-income households, highlighting an urgent need for resilient supply chains.
The Asian Development Bank (ADB) has issued a warning that an extended conflict in the Middle East will lead to a substantial increase in fertiliser and petrochemical prices across the Asia-Pacific region. Following airstrikes by the United States and Israel on Iran in February, market data already shows price hikes in crucial commodities like urea, ammonia, polypropylene, and methanol. For instance, methanol benchmark prices rose by approximately 25% in the two weeks post-attack, partly due to production suspensions by major companies like Qatar’s QAFCO.Asian countries are heavily dependent on the Middle East for these essential goods. Research indicates that 71% of Thailand's and 41% of India's urea imports originate from the region, while major agricultural economies like India, South Korea, and China rely significantly on ammonia-based fertilisers. ADB economist John Beirne emphasizes that higher fertiliser prices pose a direct threat to food security, reducing agricultural yields and escalating food inflation, with severe repercussions for lower-income households.Similarly, Asia-Pacific's petrochemical sector is highly vulnerable, sourcing around half of its key liquid raw material imports, such as seaborne naphtha, from Gulf states. Countries like China, Japan, and India imported 86.6 million tonnes of naphtha last year, with half supplied by the Middle East. Furthermore, the Middle East contributes over 25% of globally traded polypropylene exports, and China, the world's largest methanol importer, relies on the region for 60-70% of its supply, with Iran alone accounting for roughly 60% of China's methanol inflows in 2025. The ADB warns that simultaneous oil and non-energy price shocks could collectively reduce the region's growth by 1.3 percentage points and increase inflation by 3.2 percentage points over 2026-2027, underscoring the critical need for robust supply chain strategies and policy support.
