Why are fuel and petrochemical prices outpacing crude – and how long will it last?

This summer, David Chen, a Chinese national living in Japan, got an unexpected lesson in global industrial supply chains – delivered through a bag of potato chips.

When popular Japanese snack brand Calbee replaced its signature colourful packaging with monochrome designs, Chen initially assumed it was a marketing gimmick. “Then news reports explained the switch stemmed from a naphtha supply crunch. I even looked up the word,” Chen said.

Naphtha, a flammable liquid processed from crude oil, might not be a household name, yet it serves as a foundational input in polyester fibres, packaging and industrial solvents. The squeeze has prompted Japanese media to coin a new term: “naphtha bankruptcies”, reflecting mounting anxiety among some companies over securing vital oil-derived inputs.

A June survey by corporate research firm Tokyo Shoko Research underscored the widespread impact, finding that about 80 per cent of more than 7,000 responding firms had difficulty procuring oil-derived products.

However, behind Japan’s localised squeeze lies a wider strain on global supply. According to late-August estimates by Goldman Sachs analysts led by Yulia Zhestkova Grigsby, global refinery outages – which take refining capacity offline or force facilities to reduce output – stood 60 per cent above seasonal norms.

Market and industry analysts attributed the tight conditions to two main pressures: mounting geopolitical conflict and fuel export controls from China, which has the world’s largest oil-refining capacity.