We often think of oil as something that powers our cars, but petroleum is also the raw material that helps build the modern world.
Petrochemicals are made by refining crude oil. These are the chemical building blocks like ethylene and propylene used to make plastics, synthetic fibres, adhesives, coatings and packaging.
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That means petrochemicals are everywhere - in the nylon of your clothes, the soles of your shoes, the plastic in your phone, food preservatives, cosmetics and even toothpaste.
Petrochemicals are used in more than 6000 consumer products worldwide. But now, global conflict and supply chain disruptions are pushing the price of those materials higher, and experts warn everyday items could soon become more expensive.
Why is this happening?
Around 20% of the world’s oil supply moves through the Strait of Hormuz, a narrow shipping route between Iran and Oman. It is considered one of the world’s most critical energy chokepoints.
The conflict in Iran has severely disrupted shipping through the region, with analysts estimating close to 20 million barrels of oil per day have been affected.
Since oil is needed for petrochemicals, its availability affects the manufacture of thousands of products. For example, polyethylene, the world’s most widely used plastic, has surged in price across parts of Asia between 30-50%, and that trickles down to things like milk bottle caps and the bags bread comes in.
Manufacturers are now facing what economists call a "double squeeze" - higher prices for oil-based raw materials and higher freight costs to move products globally.
What products could be affected?
Because petrochemicals sit deep inside global manufacturing, the impacts are widespread.
Products likely to face price hikes include food packaging, electronics, synthetic fabrics, paints, adhesives, cosmetics and toiletries.
Healthcare could also be affected since hospitals are dependent on plastic-based medical supplies.
Petrochemicals are used to make IV bags, syringes, surgical gloves, face masks and medicine packaging.
Why New Zealand could feel it harder
New Zealand sits at the far end of the global supply chain, something that can make the country particularly vulnerable during international disruptions.
About 22% of New Zealand’s polymer supply comes directly from the Middle East, while another 56% comes from Asian manufacturers still reliant on Middle Eastern shipping routes.
When global supply tightens, larger markets are often prioritised first. Smaller, isolated countries like New Zealand can face longer shipping delays, higher freight costs and slower recovery times.
When will shoppers notice?
One reason the impact hasn’t fully hit shelves yet is timing. Many of the products currently sitting in stores were made months ago when raw materials were cheaper.
But as new inventory arrives, higher costs are expected to gradually flow through to consumers.
Some estimates suggest households could face increases of around $55 a week once the combined impact of fuel prices and more expensive goods is fully felt.
And unlike a sudden spike at the petrol pump, these increases tend to appear slowly: a few cents more for household essentials spread across hundreds of purchases.
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