Iran Crisis Threatens to Unravel Fast Fashion's Cheap Polyester

The escalating crisis in Iran is sending ripples far beyond the Middle East, threatening to disrupt the global fast fashion industry. As oil prices spike, the cheap synthetic fibers that make up most of our wardrobes—polyester, nylon, spandex—are becoming more expensive, putting pressure on brands like Shein, Temu, and Uniqlo that rely on ultra-low-cost clothing. The link between geopolitics and your closet is closer than you think.

The Overlooked Connection Between Oil and Fashion

Most consumers don't realize that their fleece jackets, leggings, and trainers are essentially petroleum products. Synthetic fibers are derived from crude oil, and when geopolitical tensions disrupt supply, the entire apparel supply chain feels the heat. The recent conflict in Iran has caused a surge in oil prices, and that is now transmitting to polymer and fiber costs. Chinese polyester futures, for example, rose 25% in March to a nearly four-year high, signaling that the era of $1 tights may be ending.

The impact is most acute for the cheapest fast-fashion items, which rely on ultra-thin margins and massive volumes. As with the panic buying seen during the COVID-19 pandemic and the initial US-Israel attacks, the first sign of a supply shock is often a rush to stock up, temporarily boosting some petrochemical firms.

Winners and Losers in the Supply Chain

Some petrochemical companies initially benefited from this panic buying. Tongkun Group, which produces about 18% of the world's polyester yarn, expects its net income to triple in the first half of the year as apparel firms bid up prices for its products. But this success is fragile. Tongkun finances its operations with short-term bank loans and quick payments from customers, meaning it relies on a flawlessly smooth supply chain to avoid a cash crunch. The conflict in Iran risks throwing a spanner in that mechanism.

Others are already suffering. Shares in Hengli Petrochemical, which refines crude oil into polymer resins and fibers, have fallen nearly a third this year as it idles production due to dwindling supplies. Chinese output of synthetic fibers in April fell 11% from the previous month to its lowest level since 2024, indicating growing strain across the industry. While primary plastics are easier to store than petrol, providing some short-term slack, that buffer is eroding as shipments through the Strait of Hormuz remain low and government petroleum reserves run down.

Which Fast Fashion Brands Are Most Vulnerable?

Not all retailers are equally exposed. Inditex, the owner of Zara, and Hennes & Mauritz source almost all their polyester from recycled materials, offering a buffer against oil price swings. In contrast, Uniqlo's parent Fast Retailing uses less than half recycled polyester for its highly engineered functional fabrics, making it more vulnerable to price hikes in virgin polyester. The cheapest fast-fashion players—like Shein and Temu—may suffer the most, as their business models depend on rock-bottom prices for synthetic garments.

Even natural fibers are not immune. Cotton prices hit a two-year high in May, and world inventories are heading toward their lowest levels in at least a decade. India, the second-largest cotton producer, depends on Gulf imports for natural gas and urea to make fertilizer, so the crisis could soon affect cotton output as well.

The Road Ahead for Sustainable Fashion

The crisis underscores the value of sustainability initiatives once dismissed as fluff. Brands that invested in recycled fibers and alternative materials are now better positioned to ride out disruptions. The petrochemical industry has some slack due to storage capacity, but with Strait of Hormuz shipments still low and strategic reserves depleting, the respite won't last. Consumers may soon see higher prices for cheap clothes, forcing a reckoning in the fast-fashion model.

Ultimately, the Iran crisis highlights the fragility of a fashion system built on cheap oil. While some companies may weather the storm, the cheapest brands face existential threats. The era of $1 tights and $15 coats may be ending, pushing both consumers and retailers to reconsider the true cost of fast fashion.