A prolonged conflict in the Middle East will not only disrupt oil markets but also drive up fertiliser and petrochemical prices across Asia and the Pacific, the multilateral Asian Development Bank (ADB) has warned.
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ADB’s brief titled The 2026 Conflict in the Middle East and Macroeconomic Risks for Asia and the Pacific compared market data on non-energy commodity price changes from before the United States and Israel launched airstrikes on Iran on 28 February, then two weeks after the attack.
Price increases seen in widely-used fertilisers like urea and ammonia, as well as petrochemical products vital for packaging and other industrial uses like polypropylene and methanol, show how disruptions in the Gulf are already tightening supplies of crucial products that bolster the region’s food production and manufacturing, the report found.
Methanol benchmark prices rose by about 25 per cent in the two weeks since the start of the conflict, and fertiliser prices surged after Qatar’s QAFCO, a large fertiliser company, suspended production following curtailments to gas output.
Several Asian countries are heavily reliant on the Middle East for fertiliser, with research showing that 71 per cent of Thailand’s and 41 per cent of India’s urea imports come from the region. Urea, the world’s most widely used fertiliser, boosts production of staple crops such as wheat, rice, maize and corn.
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Having both oil and non-energy price shocks materialising concurrently is a major concern, especially if these would be long-lasting.
John Beirne, principal economist of the Economic Research and Development Impact Department, Asian Development Bank
Most major agricultural economies in Asia Pacific like India, South Korea, China, Taiwan, Thailand, Bangladesh, and Japan also depend strongly on ammonia-based fertilisers. With urea and ammonia exports hit, farmers in the region face rising costs, highlighting an urgent need for resilient supply chains and targeted policy support, noted the study.
”Higher fertiliser prices are a threat to food security across economies in developing Asia and the Pacific as they reduce agricultural yields and lead to inflationary pressure on food prices,” said John Beirne, principal economist of the Economic Research and Development Impact Department of the ADB.
“This would have disproportionately negative effects on the region’s lower-income households, who spend a larger share of their income on food. The negative repercussions would be more pronounced should these price shocks persist and even become amplified,” he told Eco-Business.
Source: ADB
Asia Pacific’s petrochemical sector is also highly dependent on Middle Eastern feedstocks, with around half of key liquid raw matrerial imports like seaborne naphtha coming from Gulf states, according to the ADB research. Naphtha is a vital petrochemical feedstock in Asia Pacific, primarily used for producing ethylene, propylene, and other chemicals for plastics.
Asia’s major petrochemical hubs including China, Japan, South Korea, India, Singapore, Thailand and Malaysia imported about 86.6 million tonnes of naphtha last year, half of which where provided by Middle Eastern suppliers, based on analysis from Independent Commodity Intelligence Services (ICIS).
The Middle East also accounts for over 25 per cent of globally traded polypropylene exports, according to industry trade analysts, with Asia Pacific being the largest consuming and importing region of the plastic, historically absorbing a major portion of these exports because of geographic proximity and demand growth.
China, the world’s largest methanol importer, sources around 60 per cent to 70 per cent of the industrial chemical from the Middle East, with Iran alone accounting for roughly 60 per cent of the Asian super powers methanol inflows in 2025. Southeast Asia imported about 1.9 million tonnes of methanol in 2025, with roughly 40 per cent coming from Middle Eastern suppliers.
Economies in developing Asia and the Pacific should remain concerned about price increases of both oil and other non-energy commodities, said Beirne.
Given the region’s high dependence on oil imports, a prolonged period of higher oil prices would significantly worsen the region’s outlook, with ADB estimates indicating that this could lower the region’s growth by around 1.3 percentage points and raise inflation by around 3.2 percentage points over 2026 to 2027, said the study.
“However, rises in non-energy prices are also a significant concern as these could threaten food security and negatively impact already strained manufacturing supply chains. Having both oil and non-energy price shocks materialising concurrently is a major concern, especially if these would be long-lasting,” he said.
