Methanol Prices Surge on Middle East Geopolitical Tensions | China Methanol Market

Geopolitical tensions in the Middle East have driven a sharp rally in international crude oil prices. Amid continuous military conflicts between Yemen's Houthi forces and Saudi Arabia, regional oil and energy facilities faced attacks, disrupting market supply expectations and pushing WTI crude above $94/barrel and Brent crude near $99/barrel. Driven by soaring crude oil prices, tight supply and recovering downstream demand, domestic methanol prices surged significantly by 6.03% on September 8, with a nearly 35% cumulative increase since early August.

Crude Oil Surges on Regional Attacks

According to CCTV News, Saudi Arabia's Ministry of Energy announced on September 8 that multiple energy and utility facilities in southern Saudi Arabia came under attack by Yemen's Houthi movement. Fires broke out at several sites, and operations of some facilities were temporarily suspended. Xinhua News Agency reported that the Houthi movement in Yemen claimed to have carried out large-scale strikes against Saudi military and petroleum installations. Houthi spokesman Yahya Saree stated that Saudi Arabia had launched 121 airstrikes on Yemen over the prior three days, and that the Houthi military strikes were a response to the sharp escalation of Saudi military operations. The Houthis also warned they would continue military operations “deep inside Saudi territory.”

Against this backdrop, international crude oil prices rallied rapidly during the trading session. WTI crude oil futures climbed above $94 per barrel, while Brent crude briefly surpassed $99 per barrel.

Methanol Rallies Sharply on the Domestic Market

On China's domestic commodity market, chemical products traded broadly higher. By the close of trading on the afternoon of September 8, major futures contracts saw methanol jump 6.03%; para-xylene and low-sulfur fuel oil rose more than 5%, while crude oil and PTA gained over 4%. On September 8, methanol hit a peak quotation of 3,359 yuan per tonne. Compared with the relative low below 2,500 yuan/tonne in early August, its cumulative gain has neared 35%.

Strait of Hormuz Disruption Drives Import Contraction

The core driver behind methanol's sharp rally on September 8 lies in the escalating risk of disruption to shipping through the Strait of Hormuz. Most methanol plants in the Middle East remain shut down, and the contraction in import volumes will be difficult to ease in the short term. Firm coal prices have delivered notable support on the cost side. Meanwhile, the recovery of short-term methanol supply fell short of expectations. Coupled with pre-holiday restocking demand, both port and producer inventories declined, forming solid fundamental support.

Methanol prices have stayed elevated recently amid persistent tight supply. Widespread load cuts at overseas plants directly limit the scope for increased shipments to China. On the demand side, seasonal demand recovery has become the key driver in September, with overall operating rates among downstream industries picking up. Operating rates for the olefin sector have climbed steadily, while traditional downstream sectors have entered seasonal restarts. Together, these factors drive steady growth in real demand. The supply-demand balance of methanol has shifted from “weak supply and sluggish demand” to “tight supply and rising demand.”

Outlook

Overall, backed by strong fundamentals and geopolitical disruptions, methanol retains upward momentum. In the near term, market participants will monitor developments in US-Iran tensions and downstream affordability of higher prices. Methanol futures prices are likely to maintain a strong trend in the short run. Going forward, key areas to track include shipping conditions in the strait, actual arrivals in September, and the tolerance of downstream MTO units for high-priced feedstock. Investors should watch for the risk of a pullback in price premiums once market sentiment fades.

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Disclaimer: This market analysis is published for industry reference only. It does not constitute a sales quotation or investment advice. Figures and views reflect the information available at the time of writing.