Recently, plastic resin suppliers in China have been giving notice to factories that, due to the U.S.-Israel war in the Middle East and instability with global oil prices, plastic resin costs may be on the rise. As plastic resins are petroleum products, this impacts a wide variety of plastics used in injection molding. It’s a bit speculative at the moment and subject to any number of variables in the near term. This makes product pricing and forecasting of future costs extremely difficult to predict.
China is the world’s largest buyer of Iranian oil, purchasing 80 – 90% of Iran’s crude oil exports. In February, the average import cost was trading around $63 per barrel. Currently, prices have hovered around $109 – $117. Aside from the obvious cost per barrel increase, transportation costs have risen sharply. Oil prices are swinging rather wildly on a daily basis, following whatever the tenor of the latest social media posts is. Recently (and almost unbelievably), in an effort to relieve pressure on rising oil costs, the U.S. has instituted a 30-day lifting of sanctions on the sale of Iranian and Russian oil. This has done little to bring costs down.
However, to a much higher degree than other countries, China is better positioned to absorb the impact of global cost increases and, since 2021, has been working diligently to mitigate risk. They have been increasing their strategic oil reserves, currently estimated at 1.4 billion gallons. This compares to the U.S. reserve of approximately 415 million gallons. Earlier this year, China’s imports of Iranian, Russian, and Venezuelan oil and gas have increased by approximately 16% over the same period in 2025. This has enabled China to have greater control over domestic oil costs for manufacturing and consumer gas prices.
Nevertheless, the U.S.-Israel war in the Middle East has caused a global shock in oil prices, instability with supply, and concerns about the overall global economic downturn. And for China’s manufacturing exporters, this comes at a time when U.S. tariff policy caused a substantial negative impact. As a result, factories across China are entering 2026 with lower overall supplies of plastic resin, so fluctuations in material availability and pricing from suppliers are quite immediate. And resin suppliers tend not to be willing to commit to pricing beyond very short-term contracts (if any) with factories. That said, any ability for toy and game companies to commit to product purchasing sooner rather than later would be to their advantage.
What has brought a bit of a reprieve and enabled the world a momentary exhale is this week’s decision to not bring about the “total destruction of an entire civilization”. Financial markets across Europe and Asia opened sharply higher on Wednesday after the two-week ceasefire was announced. This reprieve will likely be short-lived, however, as it’s thoroughly unknown as to what and when the off-ramp to this war will look like.
Stay tuned, though- the life cycle of articles such as this and the reliance on predicting future activity and its impact on global business conditions is getting shorter and shorter. We’ll continue to keep you closely updated on conditions impacting manufacturing.
