Philip Geurts: Rising oil prices will increase plastic costs, Asia faces petrochemical production closures, and the Gulf region’s vital role in feedstocks

Rising oil prices and geopolitical tensions threaten to disrupt global petrochemical supply chains and increase plastic costs.

Key takeaways

Rising oil prices are expected to increase the cost of plastics, impacting the petrochemical supply chain.
Closures in petrochemical production in Asia are occurring due to rising costs and force majeure declarations.
Packaging costs significantly contribute to inflation in food prices, often overshadowing the actual food value.
The Gulf region is crucial for supplying feedstocks necessary for chemical production.
Ethylene and propylene are essential base chemicals for producing most bulk plastics.
The Middle East is a significant exporter of polyethylene, representing about 12% of global production capacity.
Reductions in ethylene and polyethylene production are significantly impacting Asia’s polymer exports.
Saudi Arabia’s refining capacity is much lower than its crude oil production, necessitating imports.
Saudi Arabia is a major player in chemical production due to its vast oil resources.
Food packaging faces challenges due to the lack of viable alternatives to polyethylene.
The interdependence of crude oil prices and petrochemical markets is a critical factor in global supply chains.
The ongoing conflict in Iran poses a threat to the stability of petrochemical supplies.
Geopolitical events have a direct impact on oil supply and pricing, affecting the petrochemical industry.

Guest intro

Philip Geurts is a chemicals and oil analyst at BloombergNEF, where he specializes in polymers and petrochemical markets. He provides expert analysis on the intersection of energy markets and chemical supply chains, helping stakeholders understand how disruptions in oil production impact downstream industries like plastics and packaging.

The impact of rising oil prices on plastics

The higher price of oil is likely to impact the price of plastics, affecting the entire supply chain.
— Philip Geurts
Understanding the relationship between crude oil prices and the petrochemical supply chain is crucial.
Fluctuations in oil prices have broader market implications for plastics.
The interdependence of commodities is highlighted by the connection between oil prices and plastics.
Rising oil prices could lead to increased production costs for petrochemical products.
The petrochemical industry relies heavily on crude oil as a key input.
Changes in oil prices can have ripple effects throughout the global economy.
The cost of raw materials for plastics is directly linked to oil prices.
The petrochemical supply chain is sensitive to changes in oil market dynamics.

Closures in petrochemical production in Asia

There are already closures in petrochemical production in Asia due to rising costs and force majeure declarations.
— Philip Geurts
Rising crude oil prices impact petrochemical production and can lead to supply chain disruptions.
The concept of force majeure is significant in industrial contexts, affecting production decisions.
Current events in the petrochemical industry indicate a significant supply chain issue.
The impact of rising costs is causing production shutdowns in Asia.
Force majeure declarations highlight the challenges faced by the industry.
The petrochemical market is experiencing volatility due to external economic pressures.
Production closures in Asia could affect global petrochemical supply.
The industry is adapting to changing economic conditions and rising costs.

The role of the Gulf region in the petrochemical supply chain

The Gulf region plays a crucial role in the petrochemicals supply chain by providing essential feedstocks for chemical production.
— Philip Geurts
Understanding the petrochemical supply chain and the importance of feedstocks is essential.
The Gulf region’s transformation of crude oil into key feedstocks is foundational for the industry.
Feedstocks like naphtha, butane, and propane are critical for producing base chemicals.
The Gulf region’s contribution to the supply chain supports global chemical production.
Crude oil from the Gulf is a primary source for petrochemical feedstocks.
The region’s resources are vital for maintaining the stability of the petrochemical market.
The Gulf’s role in the supply chain underscores its strategic importance.
The petrochemical industry depends on the Gulf for essential raw materials.

Ethylene and propylene as base chemicals

Ethylene and propylene are the primary base chemicals for the majority of bulk plastics.
— Philip Geurts
Knowledge of the types of plastics produced and their reliance on specific base chemicals is crucial.
These chemicals underpin the production of bulk plastics, critical for the market.
Ethylene and propylene are foundational components in the petrochemical industry.
The production of bulk plastics relies heavily on these base chemicals.
Understanding the role of ethylene and propylene is key to grasping market dynamics.
The petrochemical market’s stability depends on the availability of these chemicals.
Bulk plastics production is a significant part of the petrochemical industry.
The reliance on ethylene and propylene highlights their importance in manufacturing.

The Middle East’s role in polyethylene production

The Middle East is a major exporter of polyethylene, accounting for about 12% of global production capacity.
— Philip Geurts
Understanding the global market dynamics for polyethylene and the role of the Middle East is essential.
The Middle East’s contribution to the global polyethylene market is significant.
The region’s production capacity plays a crucial role in global supply chains.
Polyethylene exports from the Middle East support global manufacturing needs.
The Middle East’s strategic position in the market influences global pricing.
The region’s production capabilities are vital for meeting global demand.
Polyethylene is a key product in the petrochemical industry.
The Middle East’s role in the market underscores its economic importance.

Impact of production reductions on Asia’s polymer exports

Asia’s polymer exports are significantly impacted by reductions in ethylene and polyethylene production.
— Philip Geurts
Understanding the relationship between crude oil exports, naphtha production, and the impact on polymer exports is crucial.
Reductions in production affect global supply chains and market dynamics.
Asia’s role in the polymer market is influenced by changes in feedstock availability.
The impact on global production highlights the interconnectedness of the industry.
Changes in production levels can affect pricing and availability worldwide.
The petrochemical industry is sensitive to shifts in production capacity.
Asia’s polymer exports are a significant component of the global market.
The reduction in production underscores the challenges faced by the industry.

Saudi Arabia’s refining capacity and crude oil production

The refining capacity in regions like Saudi Arabia is much lower than its crude oil production, leading to the need for imports.
— Philip Geurts
Knowledge of the oil production and refining capacities in the Middle East is crucial for understanding global supply chains.
The discrepancy between production and refining capacity affects global oil markets.
Saudi Arabia’s need for imports highlights the limitations of its refining capabilities.
The region’s production levels influence global supply and demand dynamics.
Understanding these dynamics is key to grasping the complexities of the petrochemical market.
Saudi Arabia’s role in the market is affected by its refining capacity.
The need for imports underscores the interconnectedness of global supply chains.
The refining capacity impacts the availability of petrochemical products.

Saudi Arabia’s role in chemical production

Saudi Arabia is a major player in chemical production due to its vast oil resources.
— Philip Geurts
Understanding the significance of Saudi Arabia’s chemical production capacity is crucial for the global market.
The country’s resources support its position as a leading chemical producer.
Saudi Arabia’s dual role as an oil and chemical producer is strategic for its economy.
The country’s production capabilities influence global supply chains.
Saudi Arabia’s exports impact global chemical markets and pricing.
The region’s resources are vital for maintaining market stability.
The petrochemical industry relies on Saudi Arabia for essential products.
Saudi Arabia’s role in the market underscores its economic importance.

Concerns about food packaging and polyethylene alternatives

Food packaging is a critical concern due to the lack of viable alternatives to polyethylene.
— Philip Geurts
Understanding the importance of polyethylene in food packaging is crucial for the supply chain.
The scarcity of alternatives highlights a significant risk in food safety and availability.
Polyethylene’s role in packaging is essential for maintaining product quality.
The lack of alternatives could impact the food industry significantly.
The petrochemical industry’s stability affects food packaging options.
The reliance on polyethylene underscores its importance in manufacturing.
The search for alternatives is crucial for addressing supply chain challenges.
Food packaging concerns highlight the need for innovation in materials.

Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.

Rising oil prices and geopolitical tensions threaten to disrupt global petrochemical supply chains and increase plastic costs.

Key takeaways

Rising oil prices are expected to increase the cost of plastics, impacting the petrochemical supply chain.
Closures in petrochemical production in Asia are occurring due to rising costs and force majeure declarations.
Packaging costs significantly contribute to inflation in food prices, often overshadowing the actual food value.
The Gulf region is crucial for supplying feedstocks necessary for chemical production.
Ethylene and propylene are essential base chemicals for producing most bulk plastics.
The Middle East is a significant exporter of polyethylene, representing about 12% of global production capacity.
Reductions in ethylene and polyethylene production are significantly impacting Asia’s polymer exports.
Saudi Arabia’s refining capacity is much lower than its crude oil production, necessitating imports.
Saudi Arabia is a major player in chemical production due to its vast oil resources.
Food packaging faces challenges due to the lack of viable alternatives to polyethylene.
The interdependence of crude oil prices and petrochemical markets is a critical factor in global supply chains.
The ongoing conflict in Iran poses a threat to the stability of petrochemical supplies.
Geopolitical events have a direct impact on oil supply and pricing, affecting the petrochemical industry.

Guest intro

The impact of rising oil prices on plastics

The higher price of oil is likely to impact the price of plastics, affecting the entire supply chain.
— Philip Geurts
Understanding the relationship between crude oil prices and the petrochemical supply chain is crucial.
Fluctuations in oil prices have broader market implications for plastics.
The interdependence of commodities is highlighted by the connection between oil prices and plastics.
Rising oil prices could lead to increased production costs for petrochemical products.
The petrochemical industry relies heavily on crude oil as a key input.
Changes in oil prices can have ripple effects throughout the global economy.
The cost of raw materials for plastics is directly linked to oil prices.
The petrochemical supply chain is sensitive to changes in oil market dynamics.

Closures in petrochemical production in Asia

There are already closures in petrochemical production in Asia due to rising costs and force majeure declarations.
— Philip Geurts
Rising crude oil prices impact petrochemical production and can lead to supply chain disruptions.
The concept of force majeure is significant in industrial contexts, affecting production decisions.
Current events in the petrochemical industry indicate a significant supply chain issue.
The impact of rising costs is causing production shutdowns in Asia.
Force majeure declarations highlight the challenges faced by the industry.
The petrochemical market is experiencing volatility due to external economic pressures.
Production closures in Asia could affect global petrochemical supply.
The industry is adapting to changing economic conditions and rising costs.

The role of the Gulf region in the petrochemical supply chain

The Gulf region plays a crucial role in the petrochemicals supply chain by providing essential feedstocks for chemical production.
— Philip Geurts
Understanding the petrochemical supply chain and the importance of feedstocks is essential.
The Gulf region’s transformation of crude oil into key feedstocks is foundational for the industry.
Feedstocks like naphtha, butane, and propane are critical for producing base chemicals.
The Gulf region’s contribution to the supply chain supports global chemical production.
Crude oil from the Gulf is a primary source for petrochemical feedstocks.
The region’s resources are vital for maintaining the stability of the petrochemical market.
The Gulf’s role in the supply chain underscores its strategic importance.
The petrochemical industry depends on the Gulf for essential raw materials.

Ethylene and propylene as base chemicals

Ethylene and propylene are the primary base chemicals for the majority of bulk plastics.
— Philip Geurts
Knowledge of the types of plastics produced and their reliance on specific base chemicals is crucial.
These chemicals underpin the production of bulk plastics, critical for the market.
Ethylene and propylene are foundational components in the petrochemical industry.
The production of bulk plastics relies heavily on these base chemicals.
Understanding the role of ethylene and propylene is key to grasping market dynamics.
The petrochemical market’s stability depends on the availability of these chemicals.
Bulk plastics production is a significant part of the petrochemical industry.
The reliance on ethylene and propylene highlights their importance in manufacturing.

The Middle East’s role in polyethylene production

The Middle East is a major exporter of polyethylene, accounting for about 12% of global production capacity.
— Philip Geurts
Understanding the global market dynamics for polyethylene and the role of the Middle East is essential.
The Middle East’s contribution to the global polyethylene market is significant.
The region’s production capacity plays a crucial role in global supply chains.
Polyethylene exports from the Middle East support global manufacturing needs.
The Middle East’s strategic position in the market influences global pricing.
The region’s production capabilities are vital for meeting global demand.
Polyethylene is a key product in the petrochemical industry.
The Middle East’s role in the market underscores its economic importance.

Impact of production reductions on Asia’s polymer exports

Asia’s polymer exports are significantly impacted by reductions in ethylene and polyethylene production.
— Philip Geurts
Understanding the relationship between crude oil exports, naphtha production, and the impact on polymer exports is crucial.
Reductions in production affect global supply chains and market dynamics.
Asia’s role in the polymer market is influenced by changes in feedstock availability.
The impact on global production highlights the interconnectedness of the industry.
Changes in production levels can affect pricing and availability worldwide.
The petrochemical industry is sensitive to shifts in production capacity.
Asia’s polymer exports are a significant component of the global market.
The reduction in production underscores the challenges faced by the industry.

Saudi Arabia’s refining capacity and crude oil production

The refining capacity in regions like Saudi Arabia is much lower than its crude oil production, leading to the need for imports.
— Philip Geurts
Knowledge of the oil production and refining capacities in the Middle East is crucial for understanding global supply chains.
The discrepancy between production and refining capacity affects global oil markets.
Saudi Arabia’s need for imports highlights the limitations of its refining capabilities.
The region’s production levels influence global supply and demand dynamics.
Understanding these dynamics is key to grasping the complexities of the petrochemical market.
Saudi Arabia’s role in the market is affected by its refining capacity.
The need for imports underscores the interconnectedness of global supply chains.
The refining capacity impacts the availability of petrochemical products.

Saudi Arabia’s role in chemical production

Saudi Arabia is a major player in chemical production due to its vast oil resources.
— Philip Geurts
Understanding the significance of Saudi Arabia’s chemical production capacity is crucial for the global market.
The country’s resources support its position as a leading chemical producer.
Saudi Arabia’s dual role as an oil and chemical producer is strategic for its economy.
The country’s production capabilities influence global supply chains.
Saudi Arabia’s exports impact global chemical markets and pricing.
The region’s resources are vital for maintaining market stability.
The petrochemical industry relies on Saudi Arabia for essential products.
Saudi Arabia’s role in the market underscores its economic importance.

Concerns about food packaging and polyethylene alternatives

Food packaging is a critical concern due to the lack of viable alternatives to polyethylene.
— Philip Geurts
Understanding the importance of polyethylene in food packaging is crucial for the supply chain.
The scarcity of alternatives highlights a significant risk in food safety and availability.
Polyethylene’s role in packaging is essential for maintaining product quality.
The lack of alternatives could impact the food industry significantly.
The petrochemical industry’s stability affects food packaging options.
The reliance on polyethylene underscores its importance in manufacturing.
The search for alternatives is crucial for addressing supply chain challenges.
Food packaging concerns highlight the need for innovation in materials.

Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.

Loading more articles…

You’ve reached the end

Add us on Google

`;
}

function createMobileArticle(article) {
const displayDate = getDisplayDate(article);
const editorSlug = article.editor ? article.editor.toLowerCase().replace(/\s+/g, ‘-‘) : ”;
const captionHtml = article.imageCaption ? `

${article.imageCaption}

` : ”;
const authorHtml = article.isPressRelease ? ” : `
`;

return `

${captionHtml}

${article.subheadline ? `

${article.subheadline}

` : ”}

${createSocialShare()}

${authorHtml}
${displayDate}

${article.content}

${article.isPressRelease ? ” : article.isSponsored ? `

Disclosure: This is sponsored content. It does not represent Crypto Briefing’s editorial views. For more information, see our Editorial Policy.

` : `

Disclosure: This article was edited by ${article.editor}. For more information on how we create and review content, see our Editorial Policy.

`;
}

function createDesktopArticle(article, sidebarAdHtml) {
const editorSlug = article.editor ? article.editor.toLowerCase().replace(/\s+/g, ‘-‘) : ”;
const displayDate = getDisplayDate(article);
const captionHtml = article.imageCaption ? `

${article.imageCaption}

` : ”;
const categoriesHtml = article.categories.map((cat, i) => {
const separator = i < article.categories.length – 1 ? ‘|‘ : ”;
return `${cat}${separator}`;
}).join(”);
const desktopAuthorHtml = article.isPressRelease ? ” : `
`;

return `

${categoriesHtml}

${article.subheadline ? `

${article.subheadline}

` : ”}

${desktopAuthorHtml}
${displayDate}
${createSocialShare()}

${captionHtml}

${article.content}
${article.isPressRelease ? ” : article.isSponsored ? `

Disclosure: This is sponsored content. It does not represent Crypto Briefing’s editorial views. For more information, see our Editorial Policy.

` : `

Disclosure: This article was edited by ${article.editor}. For more information on how we create and review content, see our Editorial Policy.

`;
}

function loadMoreArticles() {
if (isLoading || !hasMore) return;

isLoading = true;
loadingText.classList.remove(‘hidden’);

// Build form data for AJAX request
const formData = new FormData();
formData.append(‘action’, ‘cb_lovable_load_more’);
formData.append(‘current_post_id’, lastLoadedPostId);
formData.append(‘primary_cat_id’, primaryCatId);
formData.append(‘before_date’, lastLoadedDate);
formData.append(‘loaded_ids’, loadedPostIds.join(‘,’));

fetch(ajaxUrl, {
method: ‘POST’,
body: formData
})
.then(response => response.json())
.then(data => {
isLoading = false;
loadingText.classList.add(‘hidden’);

if (data.success && data.has_more && data.article) {
const article = data.article;
const sidebarAdHtml = data.sidebar_ad_html || ”;

// Check for duplicates
if (loadedPostIds.includes(article.id)) {
console.log(‘Duplicate article detected, skipping:’, article.id);
// Update pagination vars and try again
lastLoadedDate = article.publishDate;
loadMoreArticles();
return;
}

// Add to mobile container
mobileContainer.insertAdjacentHTML(‘beforeend’, createMobileArticle(article));

// Add to desktop container with fresh ad HTML
desktopContainer.insertAdjacentHTML(‘beforeend’, createDesktopArticle(article, sidebarAdHtml));

// Update tracking variables
loadedPostIds.push(article.id);
lastLoadedPostId = article.id;
lastLoadedDate = article.publishDate;

// Execute any inline scripts in the new content (for ads)
const newArticle = desktopContainer.querySelector(`article[data-article-id=”${article.id}”]`);
if (newArticle) {
const scripts = newArticle.querySelectorAll(‘script’);
scripts.forEach(script => {
const newScript = document.createElement(‘script’);
if (script.src) {
newScript.src = script.src;
} else {
newScript.textContent = script.textContent;
}
document.body.appendChild(newScript);
});
}

// Trigger Ad Inserter if available
if (typeof ai_check_and_insert_block === ‘function’) {
ai_check_and_insert_block();
}

// Trigger Google Publisher Tag refresh if available
if (typeof googletag !== ‘undefined’ && googletag.pubads) {
googletag.cmd.push(function() {
googletag.pubads().refresh();
});
}

} else if (data.success && !data.has_more) {
hasMore = false;
endText.classList.remove(‘hidden’);
} else if (!data.success) {
console.error(‘AJAX error:’, data.error);
hasMore = false;
endText.textContent=”Error loading more articles”;
endText.classList.remove(‘hidden’);
}
})
.catch(error => {
console.error(‘Fetch error:’, error);
isLoading = false;
loadingText.classList.add(‘hidden’);
hasMore = false;
endText.textContent=”Error loading more articles”;
endText.classList.remove(‘hidden’);
});
}

// Set up IntersectionObserver
const observer = new IntersectionObserver(function(entries) {
if (entries[0].isIntersecting) {
loadMoreArticles();
}
}, { threshold: 0.1 });

observer.observe(loadingTrigger);
})();

Source: https://cryptobriefing.com/philip-geurts-rising-oil-prices-will-increase-plastic-costs-asia-faces-petrochemical-production-closures-and-the-gulf-regions-vital-role-in-feedstocks-odd-lots/