A conflict in the Middle East, in Iran, has forced refineries and processing plants to scale back operations and left hundreds of tankers of crude oil and LNG stuck in ports in the Persian Gulf, disrupting the petrochemical supply chain that feeds manufacturers and construction sites far from the war zone. **Who Pays When the Flow Stops** Vinh Thai of RMIT University said, “Unfortunately, the conflict in the Middle East, in Iran, has had a direct negative impact on the petrochemicals.” He also said, “Hundreds of tankers of crude oil and LNG are stuck in the ports in the Persian Gulf and they cannot go to their destination.” The report said about 20 per cent of the world’s oil and natural gas flows through the Strait of Hormuz, but most of it has not been moving. That stoppage is not abstract: it lands on workers, builders and small businesses who depend on materials that arrive through a global system built on petrochemicals and controlled by distant power centers. Thai said, “Because crude oil and LNG, they're so fundamental to the production of petrochemicals and petrochemicals themselves are so fundamental to other manufacturers’ items and therefore there is a chain effect.” The report said Asia relies on Middle Eastern exports to produce chemicals needed for global manufacturing, and that oil and gas infrastructure has also been damaged in the war. In other words, the people at the bottom of the chain are the ones left scrambling when the apparatus at the top seizes up. **Construction, Plumbing, and the Price of Dependence** The impact was already being felt at construction sites, where Nathaniel Smith said, “This has hit on the one material you need before you can pour a slab.” The report said plumbers were struggling to get PVC pipes, which are made with petroleum resin. Ryan Aquilina, a plumber, said, “The supplier called this morning last minute and said they didn’t have half the order.” He also said, “Cashflow's a big thing for a small business, I can't absorb 30 per cent increase. I'd have to have real hard conversations with my clients to say this is the price rise coming through and pass on those rates.” The report said some suppliers were warning their prices were about to climb by around 30 per cent. That means the cost of a conflict and a fragile supply system gets pushed downward, from refineries and ports to contractors, tradespeople and customers who never had a say in the arrangement. Nathaniel Smith, described as a former NSW Liberal MP who heads the peak body for the industry, said, “It's just another thing that's going to slow our contractors down. This is just another thing that's going to slow down the housing supply.” The report said some of the products petrochemicals are used to make include plastics, cosmetics, fertilisers and medicines, and that most are manufactured abroad. Vinh Thai said Australia imports around 90 per cent of its medicines from overseas. The report said suppliers are required to stockpile up to six months’ worth of essential medications under rules introduced after COVID, and that so far the Therapeutic Good Administration is not expecting shortages. **The Economy Built on Petrochemicals** The report also said computer chips in many common electronics are made with petrochemicals. Matt Peterson of Harrison Manufacturing said, “We have built an economy and a chemical industry on petrochemicals. We are scrambling to source alternatives to the normal types of raw materials that we would use.” The report said Peterson is an industrial chemist at a manufacturing company in Sydney that makes grease and lubricants found in trucks, buses, cars, boats, and other machines around Australia. Peterson said, “The next few months, maybe through the next six months, towards the end of the year, are going to remain a challenging time to source the raw materials,” He said the company has been researching and developing petroleum-free versions of its greases and lubricants for the past few years, using plant-based materials such as vegetable oils. Peterson said, “So, this one you can see this is kind of a nice light tan colour. So that's also containing some of the ester product here. So derived from canola oil.” Asked whether the products were all final products or still experiments, he said, “Some of them, we've got one here that is a final product and then the rest are in development.” Even the so-called greener alternative still runs through the same global trade machinery. The report said that seed oils like canola that are grown in Australia are currently shipped in the vast majority overseas, and refined vegetable oil is then imported back into Australia. That is the kind of circular dependency that keeps local production subordinate to international markets and leaves “alternatives” tangled in the same old supply web. The report said last year the Federal Government announced a $1.1 billion grants program to encourage businesses to produce alternatives to fossil fuels. Vinh Thai said, “We are on the quest to sustainability, we need to change, however it would take some time, if not decades I would say.” The Prime Minister said the immediate priority is getting more fuel into Australia but he is open to finding new ways to produce diesel and petrol here. Anthony Albanese said, “We do not need to wait for this global crisis to be over, to learn its lessons. We can and we must act now to make the most of our resources and make more things here.” Until then, the report concluded, Australia remains dependent on others and prices do too. The standstill in the Strait of Hormuz is not just hitting fuel supply; it has also disrupted the production of petrochemicals used to make everyday items, exposing how much ordinary life is pinned to systems that can be choked off by war, corporate logistics and distant control.
