The Iran war has caused a shortage of naphtha oil, forcing many Japanese petrochemical companies to reduce production, potentially affecting a large number of downstream industries.

Despite the market's speculation about a possible shortage of crude oil, Japan's industrial supply chain is facing a more urgent impact involving a lesser-known petroleum byproduct called naphtha. Several Japanese petrochemical companies have recently announced production cuts, citing concerns that the Middle East conflict could tighten the supply of naphtha, a key raw material for producing plastics. Signs of these production cuts indicate that the brewing crisis could drag down output and put pressure on profits in various industries, from food to technology. Naphtha is derived from crude oil and has a wide range of uses, from plastic bottles to building materials and electrical equipment. Naphtha can also be further processed into gasoline. Mateen Chaudhry, the founder and managing director of the business consultancy BCMG, said, "The market hasn't really considered the chain reaction that a naphtha supply disruption could trigger. This could be a warning sign, and unfortunately, Japan is highly exposed." Data from the Japan Petrochemical Industry Association shows that Japan relies on overseas sources for approximately 60% of its naphtha, with over 70% coming from the Middle East, making Japan highly sensitive to disruptions in shipping through the Hormuz Strait. Since the outbreak of the Iran conflict, shipping disruptions have pushed up naphtha prices by around 66%.