Sadara Chemical Halts All Production at One of Saudi Arabia's Largest Petrochemical Complexes

Sadara Chemical Co., the major petrochemical joint venture between Saudi Aramco and Dow Chemical, announced on March 31, 2026 that it had completed a temporary shutdown of its entire production complex in Jubail, Saudi Arabia. The decision came as the ongoing conflict between the United States, Israel and Iran continues to severely disrupt supply chains across the Middle East region.

The Jubail complex is one of the largest integrated chemical facilities in the world, built in a single phase at a cost of approximately $20 billion. It comprises 26 world-scale manufacturing units with a combined annual production capacity exceeding 3 million metric tonnes of chemicals and plastics. The facility began commercial operations in 2015 and serves more than 600 customers across over 100 countries on six continents.

The shutdown was disclosed through a regulatory filing on the Saudi Exchange (Tadawul) by Sadara Basic Services, the entity that issues Islamic bonds (sukuk) for its parent company. According to the filing, the halt was carried out in compliance with high safety standards and in a manner designed to protect operations and reduce risk. Sadara stated that it could not provide an estimate for the return to production, as this depends on both domestic and international factors. The company also confirmed that the shutdown is expected to have an impact on its financial results for 2026.

The root cause of the disruption is the war between the US, Israel and Iran that began on February 28, 2026. Maritime traffic through the Strait of Hormuz has remained severely disrupted since the start of hostilities. The conflict has constrained the movement of both feedstock and finished products, while heightening risks to critical energy and industrial infrastructure across the Gulf region. Earlier in March 2026, Iran reportedly threatened the Jubail petrochemical complex with missile strikes, although no attack has materialized as of the shutdown date.

Sadara is the only chemical company in the Middle East that uses refinery liquids such as naphtha as feedstock, which enables the production of intermediate and specialty products not available elsewhere in the region. The mixed-feed steam cracker at the site processes ethane and naphtha to produce ethylene and propylene, which feed into downstream manufacturing of a diversified range of plastics and chemical products.

The facility has significant production capacities across multiple product lines. The site can produce 1.5 million tonnes per year of ethylene, 400,000 tonnes per year of propylene, 750,000 tonnes per year of LLDPE and HDPE combined, 350,000 tonnes per year of LDPE, 330,000 tonnes per year of propylene oxide, 360,000 tonnes per year of ethylene oxide, and 150,000 tonnes per year of ethanolamines. Other products manufactured at the complex include isocyanates such as TDI (toluene diisocyanate), polyols, elastomers, ethylene amines, propylene glycol, butyl glycol ether and solution polyethylene.

The shutdown has already triggered a cascade of force majeure declarations. Sabic, the Saudi petrochemical producer that distributes Sadara's ethanolamines output, declared force majeure on ethanolamines supply in late March 2026. Dow Chemical, which holds a 35% stake in Sadara and markets a significant share of its ethanolamines production, had already declared force majeure on March 10 in several markets including Europe. Dow cited its inability to load cargo volumes at the Jubail port due to logistics disruptions caused by the war.

The ripple effects extend well beyond ethanolamines. Saudi Arabia is a major global supplier of petrochemical products. The kingdom accounts for approximately 44% of China's styrene monomer imports, 40% of India's styrene monomer imports and 33% of European imports, according to trade data. The loss of Sadara's output adds to the growing pressure on global chemical markets already strained by the conflict. US suspension-grade PVC prices have risen sharply since the onset of the war, and US methanol barge prices reached four-year highs in late March 2026.

Sadara's financial situation was already under pressure before the shutdown. The company reported a net loss of 5.793 billion SAR (approximately $1.54 billion) for the full year 2025, representing a deterioration of about 40% compared to 2024. Annual revenue fell by roughly 15% year-on-year to $2.63 billion. Sadara attributed the deepening losses to reduced sales volumes resulting from unplanned operational events and extended maintenance activities that temporarily affected production availability during 2025.

The downstream impact of the Jubail complex shutdown is substantial. Sadara operates supply pipelines carrying ethylene oxide and propylene oxide to the adjacent PlasChem Park, an industrial zone in Jubail that hosts downstream manufacturers relying on these feedstocks. Industries served by Sadara's products include advanced packaging, construction, electronics, furniture and the automotive sector. The TDI produced at the facility is primarily used in flexible polyurethane foam for furniture, mattresses, cushioning and car seats.

Petrochemical producers across the Gulf region face mounting operational challenges as the conflict persists. Operations in these facilities are closely tied to regional logistics networks and export routes that have been disrupted by the hostilities. The strategic concentration of chemical manufacturing capacity within the Persian Gulf area creates particular vulnerability to any disruption of maritime trade corridors. Chemical exports from Jubail must navigate the Strait of Hormuz to reach international markets, and the ongoing security situation has made this increasingly difficult.

The timing of any production restart at Sadara remains highly uncertain. Chemical manufacturing facilities of this scale require comprehensive safety procedures before restarting, including equipment inspections, process verification and emergency response system testing. Bringing specialized operations teams back to full capacity also requires significant coordination time. Until the broader geopolitical situation stabilizes and safe maritime access through the Strait of Hormuz is restored, the prospects for resuming normal operations remain unclear.