The ongoing conflict in the Middle East, specifically between the U.S. and Iran, has resulted in the effective closure of the Strait of Hormuz, a critical waterway that normally carries about a fifth of the world's total oil consumption [2]. This disruption has led to a surge in oil prices, with benchmark Brent crude jumping by approximately 7% to around $108 per barrel [2]. The crisis began after U.S.-Israeli strikes on Iran on February 28, prompting Tehran to shut down the strait in retaliation [2]. U.S. President Donald Trump has vowed more aggressive strikes on Iran, stating, "We're going to hit them extremely hard over the next two to three weeks. We're going to bring them back to the Stone Ages where they belong," and warning that the war could escalate if Iran does not comply with Washington's terms [2]. Iran, meanwhile, has proposed a protocol with Oman requiring ships to obtain permits and licenses, though the European Union has rejected any pay-to-pass schemes as contrary to international law [2].
The closure of the Strait of Hormuz and the resulting spike in oil prices have had significant repercussions for Japanese chemical and materials companies. Roughly 40% of major firms in this sector have downgraded their earnings forecasts for the year ended in March, citing increased costs for raw materials and squeezed profit margins [1]. More than 70% of Japan’s imported naphtha comes from the Middle East, making these companies particularly vulnerable to supply disruptions and price volatility [1]. The persistent high prices are also impacting downstream clients, amplifying effects across the manufacturing ecosystem [1].
Market analysts warn that unless crude oil prices stabilize and supply security improves, the pressure on profit margins may continue through the coming fiscal year [1]. Industry sources have indicated that supply chain risks are substantial, forcing companies to consider alternative sourcing strategies and cost controls to mitigate the impact [1]. Global equity markets have reacted negatively, with share prices depressed and U.S. bond yields spiking amid inflation concerns and supply-chain problems [2].
Efforts to restore freedom of navigation in the Strait of Hormuz have so far been unsuccessful. Britain chaired a virtual meeting of about 40 countries to explore solutions, but no specific agreement was reached, although participants agreed on the principle of free passage for all nations [2]. Iran remains defiant, with a military spokesperson stating the strait would remain closed "long term" to the U.S. and Israel [2].
CONCLUSION
The closure of the Strait of Hormuz and the resulting surge in oil prices have severely impacted Japanese chemical and materials companies, leading to widespread earnings downgrades and heightened supply chain risks. Global markets have responded with increased volatility, and unless oil prices stabilize, the negative effects on corporate profits and consumer costs are expected to persist. Diplomatic efforts to reopen the strait have yet to yield concrete results, leaving the outlook uncertain.