The Middle East conflict halts the 1mb/d of naphtha flow through Hormuz, driving up prices. As the conflict in the Middle East continues, oil and product flows through the Strait of Hormuz remain virtually halted. Normally about 1.2mb/d of naphtha goes through the strait, equivalent to c. 37% of global seaborne volumes according to Vortexa. European and Asian markets have seen weekly naphtha price jumps of over 20%, pushing them to the highest levels since 2022 and squeezing cracker margins that rely heavily on naphtha. US margins, by contrast, have improved as these crackers tend to run on domestically sourced ethane and gas feedstocks that are less linked to oil price movements. This widens the relative margin advantage for North American petchem producers in the current environment. More detailed charts are available in today''s refining pack (link). Asia feels the squeeze as c. 50% of its naphtha is sourced from the Middle East. Asia sources 50% of its naphtha for its steam crackers from the Middle East, with Japan for example relying on the region for 70% of its naphtha. With under 20 days average naphtha inventory, feedstock shortages have already forced plant shutdowns, with China''s Wanhua Chemical declaring force majeure on supplied and Singapore Refining Co lowering output at its 290 kb/d Jurong Island facility to about 60% while postponing its March deliveries to several off-takers. Who''s exposed? OMV, XOM and TTE each have 3MT of petchem capacity in the Middle East. Looking to the equities, Exxon tops the list in sheer petrochemical capacity (33MTpa), with 16Mtpa in the US a counterbalance to a similar level in Asia and the Middle East. Chevron''s position via CPChem with its weighting towards the US suggests a relative advantage. For Repsol and OMV, a weighting towards Europe is unhelpful, the same being true to some extent for TotalEnergies. OMV will have the greatest Middle East exposure following completion of BGI this quarter,...