04/07/2026
***This is a very informative letter from one of my suppliers. Please read and plan accordingly if you are considering ordering a large order.***
A Letter From Scott Sletten Concerning the War in Iran, the Nearly Closed Strait of Hormuz and the Impacts on the Supply Chain and Pricing
April 6, 2026
We have all been watching and listening to the events in the middle east as they have unfolded over the past month now. This war has effectively closed the strait of Hormuz so that there is over a 90% reduction in the number of ships allowed through that area right now. As you are probably aware, this is the area where a lot of oil and gas comes from that the world uses. Around 20% of all the oil and gas consumed in the world passes through the strait of Hormuz normally. This massive reduction in ships getting through is having major effects on supply which is driving up prices as you would expect.
Oil prices have nearly doubled now from what they were only a few months ago. This is going to have a major impact on anything derived from oil and gas such as plastics, acrylics, foams, adhesives, fertilizers and many other things. Most countries and companies have existing inventories or reserve supplies of these things so the price impact will not be immediate, but it will ramp up over time if the current situation continues. Oil is at around $110 per barrel as I am writing this letter, but there are some people predicting it could climb to $150-$200 per barrel if this situation lasts even another month or two. We are starting to hear about price increases on the raw products used to make things for our industry. Keep in mind though that JDS generally has good inventories on our products and more on order at all times. So, these increased factory costs will not affect our prices for several months on the products we import. So far, we are hearing the raw plastic and acrylic prices for example are going up 20-50% in Asia.
One question many people ask is “I thought the US was energy independent, so why does this affect us if our oil does not come from the middle east?”. The answer is that oil and gas are world-wide commodities and the contracts for these products are traded on markets, so they go up and down worldwide as well. Generally, the price of US oil is less than the world price, but usually only by a few $$. When oil prices from the middle east jump up so much or the oil is just not available as is the case right now, this causes the demand for US oil to increase as people try to buy our oil instead. The US has plenty of oil for our own use, but not enough to cover all the loss of supply from the middle east right now.
The rising price of oil gets most of the daily attention from the news, but the lack of supply is at least as big of a problem. Roughly 80% of the oil and gas coming out of the middle east goes to Asia. This oil and gas is used for their energy consumption, but it is also used to produce many products that are then sold to the rest of the world. As this lack of supply gets worse countries will begin to prioritize their own needs and ration the use of oil and gas so that their citizens are taken care of first. Some countries are already asking their citizens to conserve on energy use, and several countries are working fewer hours and four day weeks already to reduce consumption of energy. So far, we have not had a problem in getting our orders completed that we had on order since most of the raw goods to produce them were already in place. Our acrylic suppliers are already being told that they will only be able to get about 70% of what they normally purchase and that it may be reduced even more if this situation continues. These impacts will not affect our inventories for many months yet but are something we are watching and monitoring closely.
There are other items made in the middle east that are being impacted as well. A lot of aluminum is made in the middle east for example. Aluminum takes a lot of energy to produce, so there are several factories in the middle east producing the raw aluminum near the source of the energy. These factories are mostly shut down or unable to ship their goods right now which is increasing the price of aluminum worldwide, just like oil. We are being told by our aluminum suppliers that prices will be going up this summer, they are just not sure by how much yet. Fertilizer is also a big item produced in the middle east since one of the big components that makes some of them is natural gas. This will affect the yields of various crops around the world if fertilizer availability is lower than what farmers would normally use on their fields and it will also increase the costs of what they can get. Helium is another item where a large amount is made in the middle east and it is mostly offline now.
The rising price of oil is causing the price of gasoline to go up quite a bit as we all see at the pumps. This will increase the cost of freight and especially the fuel surcharges freight companies charge. This will increase your costs on the products you pay freight on and increase the costs for any companies offering free freight on their products like JDS. Amazon just announced a new surcharge for fuel on all shipments from third party sellers on their site as a result. Oil is also the main fuel used on container ships, so import costs are climbing as well.
Something unrelated to the middle east that is happening right now that has gotten very little attention is China reducing their export subsidies on some items. These subsidies are payments from the government of China that exporters receive to encourage them to produce and export certain types of products. These subsidies are closely held secrets within China, and we normally have no idea what these are unless we hear from our factories. We have recently heard that the export subsidies have been eliminated on glass, ceramic and some stone items like slate. These subsidies were about 9% to our factories, so we are getting price increases of 5-9% from our factories producing these types of products. The biggest JDS products affected will be glass and crystal awards as well as sublimation mugs. This just started April 1st, so will not affect items we import until mid-summer, but this will lead to price increases on these items this fall.
The situation in the middle east is fast changing, and we hope it will find a resolution soon. If the war ends next week and the strait of Hormuz completely opens again it will take several weeks to clear all the backlog of ships waiting to pass through. So, there would be some immediate flow of oil and gas which would be welcomed around the world. Much production of oil and gas had to be taken offline though due to damage at the well or processing facilities. In many other cases the producers just ran out of storage and had to stop their wells. I am hearing and reading that resumption of production will take at least 90 days and, in some cases, up to 5 years for things that were damaged due to attacks. This will reduce supply of these things even after a resolution is agreed to. So, the impacts of this war in the middle east are going to affect all of us for many months to come and that is the best-case scenario.
I hope you have found some of this letter informative and useful in understanding some of the dynamics at play right now and what some of the impacts will be for the products we use in our industry.
Best Regards,
Scott Sletten
CEO
JDS Industries
