Bio-based feedstocks are becoming increasingly competitive with petrochemicals as the war on Iran pushes up oil prices.
We explore key applications where producers may turn to biological feedstocks as high-performing alternatives.
We also make a case for how biomanufacturing can lower oil demand, mitigate shortages, and keep essential goods in circulation as the conflict continues to rupture oil markets.
The role of bio-based industries
Iran’s partial closure of the Hormuz Strait has caused the biggest energy shock in modern history.
Right now, the world is losing an estimated 10 million barrels daily of its most essential fuel.
This energy crisis is also a raw materials crisis. Petroleum derivatives are vital feedstocks for chemicals, materials, and agricultural fertiliser.
With price rises and shortages, Asian and European producers are either shuttering production, passing costs onto consumers, or waiting for the inflationary hit to come.
Renewable alternatives have a role to play in mitigating these economic shocks.
This is because almost every consumer product made from oil can also be made from biological raw materials, including farming and household waste.
The bio-based price premium
So far, bio-based materials and chemicals have made up just a tiny fraction of global supply. There are two main reasons why the industry remains overwhelmingly reliant on petroleum feedstocks.
First, bio-based feedstocks have been more expensive than their petroleum equivalents. The oil industry keeps costs down thanks to government subsidies, infrastructure investments, and a century’s worth of efficiency-maximising engineering.
This leads onto the second, more fundamental reason why biomass remains under-utilised by industry: bio-based producers still lack the strong policy support that would level the playing field between renewable and petroleum feedstocks.
Oil’s cost advantage is eroding
Now, things might be about to change. In 2026, producers can no longer take the cheapness and availability of petrochemicals for granted.
The Hormuz oil crisis is rapidly eroding the price advantage enjoyed by petroleum over bio-based feedstocks. This means the latter are becoming more competitive than ever.
In some cases, producers will find biological alternatives physically easier to access: already, some parts of Asia are suffering actual shortages in fossil feedstocks, leading to plant shutdowns.
These elevated prices and shortages could also persist longer-term. Unlike previous energy and oil shocks, the damage this one is inflicting on oil infrastructure could take years to repair. It could be a long time before we see $60 a barrel again.
Bio-based plastic feedstock
After petrol and gasoline, plastics will be among the first commodities to be hit by price increases.
Fortunately, some of the most developed bio-based supply chains are in plant-based plastics. Almost all major oil plastics have a bio-based equivalent and many are being mass-produced. Many are designed to be ‘drop-in’, meaning they are compatible with manufacturing equipment ordinarily used with petrochemical inputs.
Certain plastics are particularly sensitive to oil prices, making these supply chains likely to become sources of growing bio-based feedstock demand. These are polycarbonate, acrylic (Perspex), polyethylene, and polypropylene (PP).
All four of these plastics are made from naphtha, a fossil-based chemical intermediate. West Asia (the Middle East) currently accounts for about 20% of global naphtha and supplies about 40% of the market in Asia. Prices in East Asia went up 74% in two weeks after the start of the war.
Mitsubishi Chemical Corporation has developed a bio-based polycarbonate made from plant-derived isosorbide. It has already announced the material will be used in Honda’s N-ONE EVs.
Polyethylene (PET) is one of the most widely consumed plastics in the world, used to make containers, films, cosmetics packaging, and adhesives. Industrial production is in full swing at Braskem, a Brazilian petrochemical firm which makes bio-based PET from sugarcane.
Mitsui Chemicals and Mitsubishi in Japan are key players in bio-based PP capacity, as is Braskem.
Bio-based PP capacity is set to increase after a string of new project announcements.
Citroniq has entered a supply agreement with ABB to build a bio-based polypropylene facility in Nebraska, US while Vioneo is building a planned 300,000 tonne per year plant in China producing polypropylene using green methanol.
Clothing fibre
Most clothing fibres are made from oil plastics. This means the textile industry is among those first in line to be hit by the Hormuz closure.
Already, the price of polyester POY (partially oriented yarn), has jumped month-on-month. The boss of Next has warned clothing prices could rise up to 10% if the conflict extends to autumn.
Natural fibres like cotton, wool and linen are obvious alternatives here. However, in sports applications, unprocessed organic fibres lack the moisture-wicking lightness of oil plastics.
In the activewear segment, manufacturers can turn to innovative bio-based fibres that mimic the properties of fossil alternatives.
Clothing brand Pangaia is the public face of bio-based activewear. Its latest sports wear collection is made entirely from the biomaterial Evo Nylon, made by Fulgar.
Bio-based activewear fibres are steadily scaling in Asia. South Korea’s Hyosung TNC, the world’s largest spandex producer by market share, is now manufacturing a sugarcane-based spandex at its vertically integrated production plant in Vietnam.
Key to industrial spandex production is bio-based BDO – a chemical traditionally made from fossil chemicals but which can be taken from plants. Hyosung’s Vietnam site can make up to 50, 000 tonnes of the stuff a year, with a view to hitting 200, 000 tonnes of capacity.
Fertiliser
Fertiliser is one of the clearest illustrations of our global fossil dependence.
Synthetic nitrogen depends on natural gas, which accounts for roughly 34% of total production costs. The production of urea – a type of nitrogen – is concentrated in Russia, Egypt and Saudi Arabia, and Iran.
With production facilities across the Gulf now out of action, countries are seeking bio-based alternatives.
In the Philippines, 20% of the country’s urea comes from Qatar and Saudi Arabia. With inflation now inevitable, the agriculture secretary recently encouraged farmers to incorporate biofertiliser in their fertilising regime, while cutting back on synthetic urea.
Filipino biofertiliser producer Agri Specialists received a government inspection in early April as the state took stock of domestic capacity.
The company has provided data suggesting that biofertiliser is an affordable choice in the current market: a single kilogram of bio-based feed priced at ₱750 can replace two standard bags of fertiliser costing around ₱2,500.
Over in North America, demand for locally produced bio-based fertiliser is on the rise and bio-based startups have responded with plans for new productive capacity.
Just three weeks ago, US-based Solugen Global gained $50 million to scale production in a liquid nitrogen fertiliser made from hog manure.
Nitricity, another bio-based fertiliser outfit in California, is receiving an uptick in offtakes with regional organic growers. The company is already citing the Hormuz Strait closure and fertiliser price shocks as a major catalyst for company plans to expand in Europe.
A perspective shift
As it stands today, bio-based feedstocks cannot substitute petroleum feedstocks one-for-one or fix the current crisis.
For one, the only sure way to stabilise global markets will be a permanent end to the war.
Second, global processing capacity in most areas of the bioeconomy is still limited. Supply chains still need policy, investment, and development.
However, bio-based supply chains can be used to give industry and consumers some inflationary relief. Renewable feedstocks can substitute for petrochemicals in vital industries, plug some of the market shortfalls, and lower overall demand for petroleum as far as possible.
Over the medium and longer-term, however, the war is likely to mark a fundamental tipping point in the shift away from fossil dependence.
The 2026 Gulf war has altered the oil markets, and the industries it supports – possibly forever.
Some of the damaged fossil capacity in the Gulf could take years and hefty investments to bring back into operation. Long after the conflict ends, therefore, the world will have to adjust to a fundamentally altered oil market. In this context, biological feedstocks offer one tool to smooth over supply volatility.
The movement towards renewable resources and away from oil dependence won’t just be spurred by supply fundamentals, either. The Iran conflict is also engendering a shift in how governments and industries perceive fossil supply chains – from a source of cheap inputs to a source of unacceptable financial risk.
Economies particularly in the developed world are about to feel deep pain from their oil dependency. As a result, it will become increasingly difficult to make a case against investing in renewable alternatives across critical sectors.
We have historical precedent for this. The 1973 oil crisis prompted the first of Western investments into renewable energy and domestic supply security. In fact, the term energy transition was first coined during this period.
Similarly, the current moment could force governments and industry to reckon with the fragility that comes with oil dependence as the value of bio-based alternatives become clearer than ever.
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