BASF CEO Warns Iran Crisis Threatens Auto Sector and Wider Economy

BASF chief executive Markus Kamieth has issued a public warning that the prolonged closure of the Strait of Hormuz could drive a fresh oil price shock in the second half of 2026, deepening inflation and clouding the outlook for both the global automotive sector and the wider economy. Speaking to the International Club of Frankfurt Business Journalists, Kamieth said global oil reserves are gradually being drawn down and that, unless the strait reopens soon, the second half of the year could bring another surge in prices for crude oil and refined products.

The warning ties directly to the conflict that began in late February 2026, when coordinated US and Israeli strikes on Iran triggered Tehran's move to close the Strait of Hormuz. The waterway carries roughly one fifth of global seaborne oil and gas trade. Shipping through the strait has largely ceased, and it has remained under a US naval counter-blockade even after a ceasefire was announced on April 8, 2026. As of early June 2026, normal tanker traffic has not been restored, validating the concern Kamieth raised about a sustained disruption.

Kamieth quantified the exposure for the chemical industry. While the closure of the strait removes only about 3 percent of global gas supplies, it cuts off roughly 20 percent of global oil flows. Because refineries are heavily concentrated in the Middle East, the share of affected refined products such as fuels and various chemical feedstocks climbs to as much as 40 percent. For a petrochemical producer like BASF, which depends on naphta and other oil derived inputs, this concentration creates a direct cost threat that cannot easily be offset.

The automotive sector sits squarely in the path of these effects. BASF supplies plastics, coatings, adhesives and specialty chemicals used throughout vehicle production. Market analysts have estimated that petrochemical feedstock costs could rise by 15 to 25 percent under a sustained disruption scenario. For a manufacturer building several hundred thousand vehicles a year, that translates into tens of millions of dollars in added input costs, with little room to pass the burden on to consumers who are already facing inflationary pressure. Synthetic rubber, an oil derivative used in tyres, seals and hoses, also tracks petroleum prices and tends to reprice within weeks of any sustained crude shock.

The macroeconomic backdrop reinforces the warning. UK consumer price inflation rose to 3.3 percent in March 2026, up from 3.0 percent in February, a movement attributed in large part to higher energy prices linked to the conflict. Industrial sentiment has weakened in parallel, with more European manufacturers expecting output to fall than to rise over the following three months. BASF itself has framed 2026 as a subdued year, projecting a slight decline in automotive production after a strong 2025 and planning around an average Brent crude price near 65 dollars per barrel, an assumption that a renewed shock would quickly undermine.

BASF entered this period already under strain. The company has struggled for years with high energy costs in Germany, global overcapacity and competition from China. Its flagship Ludwigshafen complex, which employs around 33,000 people, has been loss-making for some time, and the company recently announced plans to cut fixed costs in its core business by up to 20 percent. A second oil price shock would add another layer of pressure on a chemical giant already attempting a turnaround.

The core risk Kamieth identified is timing. Inventories and reserves that cushioned the early months of the disruption are being depleted, so the impact of a continued closure would be felt more sharply in the months ahead rather than immediately. The situation remains active, with the resolution dependent on whether the Strait of Hormuz reopens and tanker traffic returns to normal levels.