Middle East Crisis Disrupts German Chemical Industry, Fuels Inflation Fears
Germany’s chemical industry, a cornerstone of the nation’s economy, is bracing for significant and potentially prolonged disruptions stemming from escalating tensions in the Middle East, particularly concerning the Strait of Hormuz. The crisis is exacerbating existing challenges within the sector, including high production costs, geopolitical instability, and weakening industrial activity, raising concerns about inflationary pressures and market uncertainty.
Strait of Hormuz Closure: A Critical Chokepoint
The potential closure of the Strait of Hormuz, a vital waterway for global oil and gas shipments, is the primary driver of concern. Iran has warned it would not allow oil exports to pass through the strait even as at war 1, raising the specter of supply chain bottlenecks and soaring energy prices. As of March 13, 2026, thirteen vessels have been attacked in the strait since February 28th, resulting in at least seven crew member fatalities 1. This has led to a dramatic decrease in traffic, falling from an estimated 151 ships daily in February to just four on Saturday 1.
German Chemical Industry Under Pressure
Germany’s chemical sector, the country’s third-largest industry employing around half a million people, was already facing headwinds before the latest crisis. These include high production costs, bureaucratic hurdles, a stagnating economy, and tariffs on imported goods. The industry is experiencing “weak industrial activity, high import pressure and intense price competition” 2.
Recent Performance and Bleak Outlook
Recent data reveals a concerning trend. In the fourth quarter of 2025, production saw a slight increase of 1.9%, largely driven by the pharmaceutical branch, while overall chemical production declined by 2.9% compared to the same period in 2024 2. Revenue decreased by 2.8% to 51.8 billion euros ($59.6 billion), with domestic sales falling by 3.0% 2. Wolfgang Große Entrup, Managing Director of the VCI, stated that the industry’s annual results are “abysmal,” with production, sales, and prices all in decline 2. The outlook for 2026 is similarly pessimistic, with no improvement anticipated 2.
Broader European Concerns
The disruption isn’t limited to Germany. EU countries, including Italy, Ireland, and Hungary, are raising alarms over the near-standstill in maritime freight transport through the Strait of Hormuz 3. Ireland’s Agriculture Minister Martin Heydon warned of potential government support packages for farms and food producers due to anticipated fertilizer price surges 3. Italy’s largest farmers’ lobby, Coldiretti, highlighted the damage to exports, particularly to the Middle East, with concerns surrounding perishable goods like fruits and flowers 3.
Financial Infrastructure Strain
Beyond the physical dangers, the crisis is disrupting the financial infrastructure supporting global shipping. Captains and shipowners face legal, insurance, and brokerage complexities, leading many to pause operations and wait for the situation to stabilize 4. Iran warned that oil prices could reach $200 a barrel, prompting the International Energy Agency to announce the release of 400 million barrels of oil from emergency reserves in an attempt to stabilize the market 4.
(1 euro = $1.1401 as of March 13, 2026)
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