Global Supply Shifts Offer Brief Respite to European Chemicals

The ongoing conflict in the Middle East is creating temporary competitive advantages for European chemical producers while forcing major energy firms to adjust global portfolios, according to industry reports from May 12, 2026. The supply shock from the Iran war, which has disrupted flows of key feedstocks like naphtha and LPG from the Persian Gulf, is hitting Asian petrochemical producers hardest, according to OilPrice.com.

Europe's chemicals sector, described as being in crisis since 2022, saw a slight positive momentum beginning in March, according to OilPrice.com. Matthias Zachert, CEO of Germany-based LANXESS, stated that disrupted Asian supply chains have caused customers to turn back to European suppliers. "Supply capability is currently a significant competitive advantage," Zachert said, though he noted the company has raised prices to pass on higher costs. Evonik also reported increased sales volumes in certain businesses since March, which it attributed to customer pre-buying due to the war.

Analysts and executives, including Zachert, warn this relief will be short-lived. They expect Asia to regain its cost-advantage as a cheaper producer once Strait of Hormuz supplies normalize. Solvay reported a solid first quarter but added, "we do not expect the operating environment to improve in the short term," according to OilPrice.com.

Meanwhile, Shell is moving to sell its network of approximately 60 service stations in France, French daily Les Echos reported on Tuesday, citing company communications. The UK-based supermajor expects to find a buyer in the third quarter of this year, with a deal potentially finalized early next year. The Shell-branded stations, operated under concession contracts, posted an operating profit of about $127.5 million last year. This move is part of CEO Wael Sawan's strategy to streamline operations and boost shareholder returns by focusing on core oil and gas production and trading, according to OilPrice.com. Shell recently agreed to a $16.4-billion acquisition of Canada’s ARC Resources to bolster its North American gas position and LNG supply for Asia.

In the UAE, ADNOC Gas announced Tuesday that it expects to restore processing capacity at its damaged Habshan gas complex to 80% by the end of 2026, with full restoration in 2027. The massive facility, with 6.1 billion standard cubic feet per day of capacity, was forced offline by Iranian strikes in early April. ADNOC Gas said it has already restored 60% of the complex's capacity. The company warned that the ongoing closure of the Strait of Hormuz is expected to dent its second-quarter net income by up to $600 million, assuming maritime operations return to normal before the quarter ends, according to its filing with the Abu Dhabi Securities Exchange.

These global developments underscore how geopolitical tensions in the Middle East continue to reverberate through energy and petrochemical markets, creating temporary shifts in trade flows and competitive dynamics while major companies reposition their assets.