Geopolitical Escalation and Global Energy Shock
Since late February 2026, escalating tensions in the Middle East have created significant uncertainty in global energy and commodity markets. On February 28, the United States and Israel launched a military operation against Iran, prompting retaliatory measures and Iran’s closure of the Strait of Hormuz on March 1. The strait handles roughly 20%–30% of global seaborne oil trade, so its closure immediately disrupted energy supply chains, with ripple effects across petroleum coke markets. As a byproduct of delayed coking in refineries, petroleum coke is critical for aluminum electrolysis, prebaked anodes, cement, fuel and carbon materials. Consequently, geopolitical risk has triggered upward pressure on both crude oil and petroleum coke prices, while influencing downstream industrial costs.
| Exporting Country | Main Product Type | China Import Share | Notes |
|---|---|---|---|
| Saudi Arabia | High sulfur sponge & shot coke | 64% | Prebaked anode feed, high shipping risk |
| Oman | shot coke | 22% | Outside Strait of Hormuz, lower risk |
| Kuwait | Medium sulfur sponge coke | 12% | Strategic refinery, moderate risk |
Key Middle East Petroleum Coke Export Routes to China
Impact on Crude Oil Prices and Cost Transmission
The Strait of Hormuz blockade sparked expectations of rising oil prices. WTI crude is forecasted at $80–90 per barrel, while Brent may reach $72–75 per barrel. Prolonged conflict could push crude above $100 per barrel, potentially $120–150 per barrel in extreme cases. China imported 579 million tons of crude in 2025, with about 36% from Gulf countries, making it sensitive to Middle East disruptions.
Rising crude costs increase refinery operating expenses, which transmit to petroleum coke price. Historical precedent shows that during the June 2025 Israel-Iran conflict, a 15% surge in oil prices led to an 8–12% rise in local petroleum coke prices. The cost transmission is especially significant for low sulfur petroleum coke, where domestic demand is tight and price elasticity is high.
Supply Chain Disruptions
The conflict impacts petroleum coke supply through three channels:
Transportation disruption – Ships rerouted via Cape of Good Hope increase costs and transit time; war-risk insurance premiums rise.
Regional refinery production – Potential crude supply interruptions or unit shutdowns may reduce petroleum coke output. Iran’s direct contribution is <3% globally, so indirect effects dominate.
Trade flow adjustments – Some Saudi and Kuwaiti shipments may be delayed or redirected, affecting availability of high sulfur sponge coke and shot coke.
| Source Country | Supply Risk Level | Impact on China Imports |
|---|---|---|
| Saudi Arabia | High | Disruption of 64% Middle East supply |
| Oman | Medium | Minimal impact; outside strait |
| Kuwait | Medium | Delayed shipments possible |
Petroleum Coke Supply Risk by Source Country
Domestic Production and Inventory Status
Domestic delayed coking units resumed operations by February 2026, reaching 69.89% utilization (up 4.7% MoM). Early Q1 imports increased 20.5% YoY to 2.88 million tons due to pre-maintenance stocking, pushing port inventories above 4.2 million tons. Seasonal demand reduction around the Spring Festival tempers immediate consumption, keeping short-term supply ample.
Petroleum Coke Response
Despite sufficient supply, petroleum coke price has increased:
Low sulfur petroleum coke leads the rise due to tight supply for high-end carbon and lithium battery anodes.
Medium and high sulfur petroleum coke see moderate gains; fuel demand is constrained due to abundant coal.
Single day spikes exceeded 600 CNY/ton for some grades, while broader stage increases are forecasted 100–400 CNY/ton.
| Grade | Jan 2026 | Feb 2026 | March Outlook |
|---|---|---|---|
| Low sulfur | 4,100 | 4,250 | 4,300--4,400 |
| Medium sulfur | 2,750 | 2,850 | 2,850--2,900 |
| High sulfur | 1,900 | 2,000 | 2,000--2,100 |
Recent Petroleum Coke Price Movement (CNY/ton)
Market Outlook and Scenarios
Petroleum coke price trajectory depends on the duration of the Strait of Hormuz blockade:
Short-term resolution: Shipping resumes, crude risk premiums fall, petroleum coke prices stabilize at elevated levels, then gradually decline due to high inventories.
Prolonged conflict: Crude transport restrictions, reduced refinery operations and tighter supply cause prices to spike. Low sulfur coke is most affected, while high sulfur coke reacts moderately. Imports may increase to offset shortages, pushing domestic prices to new highs.
Conclusion
The escalation of Middle East tensions has created a complex and multifaceted impact on petroleum coke price. Key takeaways include: first, crude oil price increases are transmitted to petroleum coke costs through refinery economics; second, supply disruption risk is concentrated in Middle Eastern exports, particularly affecting grades tied to the Strait of Hormuz; third, domestic production and diversified imports provide partial insulation for China, preventing immediate shortages. Low sulfur coke shows the highest price sensitivity, while high sulfur coke reacts more moderately due to weaker fuel demand. Ultimately, the market outlook is heavily contingent on the duration and severity of the conflict, with short-term volatility likely and medium-term price trends closely linked to both supply chain stability and crude oil risk premiums. The ongoing situation underscores the critical interplay between geopolitical events and commodity price dynamics, highlighting petroleum coke’s sensitivity to global energy disruptions.
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