Middle East War Disrupts Global Supply Chains and Aviation Amid Diplomatic Efforts

Oil prices continued to decline on Wednesday, with West Texas Intermediate briefly falling below $100 a barrel, extending losses from the previous day. This drop provided support to equities, as investors followed another record day for the S&P 500 and Nasdaq, driven by tech firms.

The developments come amid broader disruptions from the Middle East war that began in late February. China's Foreign Minister Wang Yi called for a complete cessation of hostilities in the Middle East and urged the United States and Iran to reopen the Strait of Hormuz as soon as possible.

During talks with his Iranian counterpart Abbas Araghchi, Wang Yi emphasized that continuing negotiations remains essential and that restarting hostilities is unacceptable. The statement from China's foreign ministry highlighted the need for an immediate end to fighting.

President Donald Trump announced on Tuesday that he was halting the U.S. military operation to escort ships through the Strait of Hormuz after just one day, aiming to facilitate a deal with Iran to end the war. The operation, dubbed Project Freedom, began on Monday but was paused following requests from mediator Pakistan and other countries.

Trump stated on Truth Social that great progress has been made toward a complete and final agreement with Tehran. U.S. Secretary of State Marco Rubio spoke by telephone with Russian Foreign Minister Sergei Lavrov about the Middle East war and the Ukraine conflict.

Following the call, Rubio told reporters at the White House that the United States has completed its offensive operations against Iran. South Korea's Foreign Minister Cho Hyun held phone talks with his Jordanian counterpart Ayman Hussein Al Safadi to discuss the latest developments in the Middle East and bilateral relations.

Cho expressed condolences for the damage suffered by Jordan amid the conflict and hoped for a swift restoration of peace. Safadi sought South Korea's continued support for regional stability and cooperation in post-conflict reconstruction projects.

“The operation is over -- Epic Fury -- as the president notified Congress. We're done with that stage of it.”

The United States is seeking concrete actions from Iraq's new prime minister Ali al-Zaidi to distance the state from pro-Iran armed groups before resuming financial and security aid. Meanwhile, Israel's military issued an evacuation warning for a dozen villages in southern Lebanon ahead of expected strikes, despite a truce intended to halt fighting with Iran-backed Hezbollah.

A French shipping company reported that one of its vessels, the CMA CGM San Antonio, was targeted in an attack in the Strait of Hormuz on Tuesday, with some crew injured and evacuated.

The war has triggered a plastic shortage in Asia, as the region imports around 70% of its naphtha supply from the Middle East, a key feedstock for polymers like polyethylene and polyethylene terephthalate. These materials are essential for products such as food packaging, cosmetic containers, plastic bags, and medical consumables, with prices skyrocketing since the conflict began and supplies became locked behind the Strait of Hormuz.

Experts note that the disruption is shaking the stability of plastic as a basic industrial material and moving quickly through supply chains. The shortage is particularly affecting healthcare, limiting availability of items like IV bags and sterile packaging, and the food industry, where plastics extend shelf life and reduce spoilage.

Manufacturers of recycled plastics are seeing an unexpected windfall, with prices jumping from an average of $400 per ton pre-crisis to $1,600 per ton. Virgin plastics have risen from $950 per ton to over $1,800 per ton. This narrowing price gap is reshaping investment logic in Asia, though the recycling industry remains underdeveloped.

“The stability of plastic as a basic industrial material has been shaken.”

Small- and medium-sized enterprises are likely to be hit hardest, lacking tools like hedging and long-term contracts that larger firms have. If the crunch persists, it could lead to closures and consolidation in sectors such as plastic toys and packaging. The impacts may extend globally, raising procurement costs for brands in Europe and the United States.

Lufthansa warned on Wednesday of rising risks to its financial performance due to the Middle East war and potential jet fuel shortages. The airline has locked in prices for about 80% of its 2026 fuel supplies, but extra kerosene costs are projected at 1.7 billion euros this year.

The Airport Authority, which operates Hong Kong International Airport, compiled these figures and plans to review charges to ease the industry's burden. Despite cancellations, flight numbers rose 5% and passenger throughput increased 8% year on year in April, with carriers redirecting capacity to markets like Paris, Zurich, and London.

Fuel price indices across the Asia-Pacific have more than doubled since the war broke out on February 28.