The prospect of a prolonged Iran war and sustained high oil prices is prompting equity investors to reassess the broader industry-wide implications. As supply chain disruptions intensify, previously overlooked sectors, from food delivery companies to cosmetics manufacturers, are being drawn into the turmoil.
Since the conflict began, global stock markets have declined by 5.5%, marking the worst monthly performance since 2022, with Asia experiencing the most severe impact. Traders, concerned about resurgent inflation and widening fiscal deficits due to war costs, have pushed back expectations for the next Federal Reserve interest rate cut to mid-2027.
Currently, industries such as aviation and shipping are among the hardest hit, while defense and energy stocks have clearly benefited.
As the conflict persists, tightening the supply of energy and industrial raw materials, investors are preparing for wider ripple effects. The market is beginning to focus on previously ignored risk areas—including chip manufacturers and apparel suppliers—worried about a range of issues from helium shortages to rising raw material costs.
"The shock, initially confined to the energy sector, is rapidly spreading," said Hebe Chen, Senior Market Analyst at Vantage Global Prime. "The war premium is no longer just an energy story but a repricing of the entire market, and secondary victims are only just beginning to emerge."
The following are key sectors investors are scrutinizing as the war's impact broadens:
**Chip Manufacturers** Semiconductor companies, which had benefited from the global AI boom, are now entangled in supply chain chaos triggered by the war. Estimates suggest that the closure of a major Qatari liquefied natural gas plant following an Iranian drone attack has idled approximately one-third of global helium production capacity. Industry intelligence analyst Michael Deng pointed out that helium is an indispensable key material for chip production with almost no substitutes.
Beyond helium shortages, soaring energy prices could increase operating costs for AI data centers, subsequently dampening semiconductor demand. The Philadelphia Semiconductor Index has fallen over 5% since the conflict erupted, with Asian chip stocks like Samsung, SK Hynix, and TSMC also declining. Conversely, shares of Indian helium producer Linde India have risen.
The market currently views the impact as relatively contained. UBS analysts, including Sunny Lin, believe that given the structural surplus of helium in recent years and diversified procurement arrangements, the impact on profit margins is limited. Jefferies analyst William Beavington noted that TSMC holds about six months of safety stock and does not foresee immediate issues.
However, some institutions are more cautious. Gary Tan, Portfolio Manager at Allspring Global Investments, stated, "The market is significantly underestimating concerns about potential disruptions to the semiconductor supply chain. Wafer fabs are among the most energy-intensive manufacturing facilities globally, and regions like Taiwan and South Korea are highly dependent on liquefied natural gas."
**Food and Cooking Appliances** Supply disruptions in the Middle East have caused severe gas shortages in India, which relies heavily on imports from the region. Consequently, local restaurants are considering shorter operating hours and streamlined menus to cope with gas scarcity, leading to a slowdown in order growth for food delivery platforms. Stocks like Eternal, Swiggy, and Jubilant Foodworks are under pressure.
Conversely, fears of long-term gas shortages have boosted shares of induction cooker manufacturers such as TTK Prestige and Stove Kraft, as consumers switch to alternative cooking appliances. Meanwhile, US ride-hailing and delivery platforms Uber, DoorDash, and Lyft also face pressure. Industry intelligence analyst Mandeep Singh noted that fuel is the largest variable cost for drivers, making these businesses highly sensitive to oil price shocks.
**Automakers** Rising oil prices could suppress consumer demand, putting pressure on the automotive industry. Industry intelligence analyst Steve Man indicated that among mainstream US automakers, Ford is the most vulnerable due to its high reliance on sales of gas-guzzling pickup trucks. Bernstein analysts, including Eunice Lee, noted that Toyota and Hyundai are hit hardest by sales declines in the Middle East, which account for 17% and 10% of their total sales, respectively. Hyundai's shares plunged 23% this month, while Toyota fell 12%.
**Retailers** The retail sector faces a double blow: higher oil prices increase delivery costs while squeezing consumers' disposable income. Shares of US-listed apparel brands and retailers have declined, with companies like Lululemon, Nike, and Macy's experiencing double-digit percentage drops this month.
**Fertilizers** Andrea Petroczi-Urban, Analyst at Morningstar DBRS, stated that 35% of global fertilizer raw materials transit through the Strait of Hormuz. This bottleneck is expected to push up fertilizer prices in North America. Driven by expectations of tighter supply, shares of fertilizer producers like Nutrien and Mosaic have risen.
The outlook is bleaker for the Asia-Pacific region, which is highly dependent on Middle Eastern imports. Morgan Stanley economists pointed out that Australia is particularly vulnerable; its major fertilizer stock, Dyno Nobel, fell over 9% this month, while Nufarm declined 4%. In India, the war has led to restricted gas supplies, threatening fertilizer production. Shares of companies like Rashtriya Chemicals & Fertilizers have fallen.
**Chemicals** Aleksey Yefremov, Analyst at KeyBanc Capital Markets, said approximately 15% of global ethylene and polyethylene supply is directly affected by the conflict. As global supply tightens, demand for US chemicals could rise, potentially improving profit margins for companies like Dow and LyondellBasell. The closure of the Strait of Hormuz has disrupted ethylene production, causing ethylene prices to surge and impacting downstream industries like plastics, detergents, polyester, and coatings. European cosmetics-related stocks such as L'Oréal and LVMH are under scrutiny due to their high reliance on plastic raw materials.
The pain has also spread to the paint industry, whose raw materials largely derive from petroleum by-products. ICICI Securities estimates that if oil prices stabilize at $100 per barrel, companies like Asian Paints would need to raise prices by 22% to protect their profit margins.
**Alternative Energy** The deepening oil crisis is reviving interest and capital flows into sectors like wind power, solar photovoltaics, lithium batteries, and energy storage. Wind turbine manufacturer Goldwind saw its shares rise about 10% this month, while battery giant CATL advanced 16%.
**Homebuilders** US homebuilder stocks are under pressure as rate cut expectations fade, potentially leading to higher mortgage rates. Keith Hughes, Analyst at Truist Securities, said the key is whether these impacts are long-lasting. A rise in the 10-year US Treasury yield would push up mortgage rates, potentially negatively affecting homebuying demand and consumer confidence. Higher interest rates could also impact building materials firms like TopBuild and Builders FirstSource, while rising crude oil and natural gas prices would increase costs for companies such as Mohawk Industries and Amrize.
**Sugar and Tires** Indian sugar companies like Balrampur Chini and Shree Renuka Sugars could benefit. The market expects rising oil prices to increase ethanol procurement prices, as sugar mills supply ethanol to state-owned oil companies for gasoline blending. Tire manufacturers, who use petroleum by-products to produce synthetic rubber and reinforcing materials, are seeing pressure on their shares, such as Apollo Tyres and MRF, due to higher oil prices.
**Metals** Beyond the energy supply shock, disruptions are affecting both raw material imports for Middle Eastern smelters and metal exports. The Persian Gulf region accounts for about 9% of global aluminum production. Aluminum prices recently hit a four-year high before retreating. European giant Norsk Hydro is at the center of the storm due to its 50% stake in Qatar's Qatalum aluminum venture. Orderly production cuts began on March 3rd due to regional gas shortages; shares fluctuated but recovered somewhat after Qatalum announced no plans for a full shutdown.
Citi analyst Ephrem Ravi noted that even if the risk of direct attacks subsides, the impact of shutdowns will persist because aluminum smelters take 3-6 months to fully restart. Shares of companies like Alcoa have risen, as their smelting operations face limited disruption and they directly benefit from higher metal prices.
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