Iran War Energy Shock Drives Up Consumer Goods Costs

A war launched by the United States and Israel against Iran, beginning in late February 2026, has triggered a global energy supply shock. The closure of the Strait of Hormuz removed approximately 10% of the world's oil supply and 20% of liquefied natural gas from the market, forcing tankers to reroute around South Africa's Cape of Good Hope. These disruptions have inflated the cost of petrochemicals used in over 6,000 consumer products, including synthetic fibers for clothing, footwear, toys, and medical supplies.

Production costs have surged across global hubs. In India and Bangladesh, polyester yarn producers like Filatex Fashions reported feedstock cost increases of nearly 30%, while Coats Bangladesh implemented a 15.5% price hike on sewing thread. In Surat, India, textile factories have faced partial shutdowns and labor shortages. The impact extends to medical supplies, where Gentell plans a 15% price increase for wound care products due to rising adhesive costs. Polyester textile materials rose from 90 cents to $1.33 per kilogram following the attacks.

While global retailers such as H&M, Zara, and Primark are currently shielding consumers through forward buying and a shift toward recycled polyester, analysts warn of potential demand destruction if these costs are eventually passed to the public. The footwear industry expects price increases of 1.5% to 3% by late 2026 if oil remains above $90 per barrel. In response, many companies are abandoning just-in-time manufacturing for just-in-case inventory buffers and diversifying supply chains into India, Vietnam, and Malaysia.