West Asia conflict: Supply, price disruptions impact several commodities beyond crude oil

It’s not just supplies of crude oil and natural gas that are getting disrupted due to the West Asia crisis. Supply chains for a whole host of crucial goods are now getting impacted and their availability in India is getting disrupted as the war between US, Israel, and Iran entered its 10th day.

Fertilisers, aluminium, and even plastic based packaging material are seeing a spike in prices and disruption in supplies as the Middle East conflict plays out with the region being a key supplier of these goods to India.
A key worry for India is now the supply and prices of urea and fertilisers, with the sowing season now just about starting. India imports about 30% of its fertiliser requirement and the Middle East supplies nearly 40% of it, said a recent report by Crisil Ratings.

In FY26, India’s fertiliser imports are seen to jump 41% to 22.3 million tonne as per the Fertiliser Association of India following a surge in demand due to good monsoon rains. The Centre has allocated Rs 1.71 lakh crore as fertiliser subsidy in FY27 as against Rs 1.86 lakh crore in the current fiscal. The fertiliser subsidy for this fiscal was initially budgeted at Rs 1.67 lakh crore.

Kotak Institutional Equities in a note said that India’s import prices of urea have jumped 20% in the past month amid supply constraints imposed by China. The outbreak of war in West Asia threatens to further increase India’s fertiliser import costs and perhaps affect availability ahead of the upcoming Kharif season, it further said. 

The Gulf region is also an important producer of aluminum. GCC forms 8-9% of global aluminum production and exports about 75% of its volumes or nearly 6.5% of global demand. “Announcements of force majeure in the Middle East by Hydro and Alba within two days, less than a week since the war, point to the vulnerability of the aluminum supply chain in GCC (six nations in the Gulf),” said another report by Kotak Institutional Equities. The smelters are largely dependent on imports of alumina/bauxite from the Strait of Hormuz. Thus, both the raw materials and fuel for electricity remain vulnerable, it further pointed out. 

Meanwhile, the packaging industry is also witnessing a sharp and rapid escalation in polymer prices—particularly PET, HDPE and PP—alongside tightening supply across the market. Brands with long-term contracts with packaging manufacturers are relatively better insulated, even as war-related surcharges emerge, while spot purchasers face significantly higher volatility, players underline.

“At Alternicq, we are working closely with our suppliers and customers to ensure there are no supply disruptions, and we remain hopeful of managing material availability even during this challenging period,” said Thimmaiah NP, MD and CEO, Alternicq, adding that the eventual impact on end consumers will depend on how brands choose to respond.