From Crayons to Clothes: The Ripple Effect of Rising Oil

The impact of the Iran war is beginning to extend beyond energy markets, with potential consequences for everyday consumer goods.

While rising gasoline and fuel costs are the most visible effect, experts say disruptions to oil supply chains are also increasing the cost of petrochemicals, which are essential to manufacturing.

These oil-derived materials are used in more than 6,000 products, including clothing, toys, shoes, packaging, and household items.

Manufacturers are already reporting early cost pressures. Some suppliers have seen raw material prices rise by 10% to 15% within weeks of the conflict.

For example, a key input used in polyester textiles has increased from around $0.90 to $1.33 per kilogram. Because materials can account for up to 30% of production costs in industries like apparel and footwear, these increases may begin to affect retail prices.

Industry estimates suggest that some products, such as shoes, could see price increases of 1.5% to 3% in the coming months.

Many companies are currently relying on existing inventory, which typically lasts two to three months, to delay passing costs to consumers. However, if oil disruptions continue, higher prices could spread across a wide range of goods worldwide.