Road Construction Disrupted Worldwide as Iran War Triggers Bitumen Shortage

A severe bitumen shortage triggered by the Iran conflict that began on February 28, 2026 is disrupting road construction projects across multiple continents. Iran, historically one of the world's largest bitumen exporters, has seen its shipments collapse following the closure of the Strait of Hormuz and broader disruptions affecting Iranian refineries and export terminals.

The shortage has hit countries that traditionally relied on Iranian bitumen as a primary or significant import source. India and South Korea have reported delays on major highway construction programs, with contractors struggling to secure adequate volumes at acceptable prices. Italy and Australia have seen pothole repair operations slowed, raising concerns about road safety as the standard maintenance season progresses.

Nepal has emerged as one of the most severely affected countries. Asphalt works have stopped on flagship national projects including the Mid-Hill Highway, Postal Highway, Koshi Corridor, Kaligandaki Corridor, Karnali Corridor and the Kathmandu-Tarai Expressway. The Department of Roads has confirmed that the disruption is hitting nationally strategic infrastructure during the peak construction season, and that annual road surfacing targets are unlikely to be met.

The price impact has been substantial. Bitumen typically accounts for 20 to 30 percent of total asphalt production costs, meaning any price escalation translates directly into higher pavement project budgets. Importing nations are seeing delivered bitumen costs rise by an estimated 15 to 25 percent due to a combination of higher product prices and increased shipping and insurance costs across affected maritime routes.

Alternative suppliers including refineries in South Korea and Singapore, alongside major oil companies such as Shell and TotalEnergies, are working to capture market share from disrupted Iranian flows. However, global production capacity cannot immediately replace Iranian export volumes, which leaves regional shortages particularly acute across South and Southeast Asian markets that historically depended on Iranian cargoes.

Procurement teams across major infrastructure programs are responding by locking in forward contracts, increasing onshore bitumen storage capacity and prioritizing critical projects over routine maintenance. Some highway authorities are revisiting project timelines and tender prices to reflect the new cost environment.

The shortage carries broader economic and safety implications. Delayed pothole repairs increase road accident risks. Stalled highway construction slows logistics improvements that underpin national supply chains. Public works budgets face renewed pressure at a time when many governments are also dealing with elevated fuel costs caused by the same regional conflict.

China, Indonesia and several African nations with active road building programs are also exposed to the price escalation, although their dependency profiles vary. Industry analysts expect supply tightness to persist as long as Iranian exports remain constrained and shipping risk premiums stay elevated across the Persian Gulf and Indian Ocean trade lanes.