Quick Facts
- Oil prices jumped 17% as Iran war disrupts Strait of Hormuz, affecting 25% of global oil shipments
- Polyester raw material costs rose 15-25% due to crude oil price increases exceeding $125 per barrel
- Fashion executives expect 73% of brands to raise prices in 2026, up 19 percentage points from 2025
The U.S.-Israel war in Iran has sent oil prices soaring and created supply chain disruptions that are hitting the fashion industry hard. Crude oil prices exceeded $125 per barrel after Iran began mining the Strait of Hormuz, a critical waterway that carries 25% of global oil shipments.
The price spike directly impacts fashion brands that rely heavily on polyester, which accounts for most synthetic fibers used in clothing production. Polyester chip raw materials jumped 15-25% as oil prices surged nearly 17% between February 23 and March 9.
“The reason the chemical raw material supply chain has suffered a deep impact is primarily due to the destruction of core oil facilities in the Middle East and the blockade of export shipping routes,” according to industry analysis. Polyester production depends on petrochemical feedstocks whose prices fluctuate with crude oil markets.
The crisis extends beyond raw materials. Maritime traffic through the Strait of Hormuz has dropped 90% in the past week, disrupting the supply of petrochemicals needed for synthetic fiber production. Shipping costs are also rising as fuel represents one of the largest operating expenses for ocean freight.
Fashion executives are responding by preparing price increases. Nearly three-quarters plan to raise prices in 2026, with 26% of fashion brands considering increases above 5%. This represents a sharp jump from previous expectations.
Patrick Chalhoub, CEO of Chalhoub Group, which partners with Louis Vuitton and Christian Dior in the Middle East, said oil price impacts are “heavily affecting our margins” through currency fluctuations and higher costs for tourists and local consumers.
The global polyester fiber market, valued at $82.07 billion in 2025, was projected to reach $148.11 billion by 2034. However, current disruptions threaten this growth trajectory as Chinese manufacturers face significant cost increases amid fragile global demand.
The crisis highlights fashion’s deep dependence on fossil fuels. Synthetic fibers derived from oil are expected to represent 73% of global apparel production by 2030, according to the Changing Markets Foundation.
Industry sentiment has darkened considerably. Forty-six percent of executives expect conditions to worsen in 2026, up 8 percentage points from 2025. Trade disputes and tariffs rank among leaders’ top three risks for the year ahead.
Read more: ‘It will be felt everywhere’: How rising oil prices will impact the fashion industry
