Where the auto supply chain is most threatened by the Iran war
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Oil prices above $100 per barrel, rising fuel costs for consumers and shortages of metals and petrochemicals refined in the Gulf region could hurt automakers.
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The auto industry keeps getting hit by supply constraints at a time when it is making some of the biggest transitions in its more than century-long history. The war in Iran could be just the latest of those issues. Though the region is not a major maker of automotive parts, it does produce key resources such as oil and aluminum. About 20% of the world's oil travels through the Strait of Hormuz , according to the U.S. Energy Information Administration, a major shipping artery that is bordered on two sides by Iran and Oman. Oil prices surged above $100 a barrel on Monday with concerns about supply as the war continues. Drivers are already paying more at the pump. Gas in Iowa, for example, is now above $3 per gallon, according to GasBuddy analyst Patrick De Haan. That's still a ways from the peak prices hit in 2022, De Haan said. But there have been two 12 cent increases nationwide in the past two weeks. That's two of the largest single day increases going back to 2005 in terms of nominal increase in cents per gallon , according to GasBuddy. "I think it's the pace of the increases this week that's really catching Americans off guard, and that might be making them feel a little bit nauseous about the prospect of driving, getting out, road trips," De Haan said. Diesel and jet fuel prices are rising as well, which puts pressure on shipping and freight, he added. High oil prices stand to drive up the cost of petrochemicals, which is what plastics are made of. Some estimate that about 30% of the parts on a car are plastic. "It's not just raw crude coming out [of the Strait]," said Dan Hearsch, managing director at AlixPartners. "There's a lot of refining capacity. So ethylene, propylene, a lot of the aromatics, also ship out of that region. Those are not ports that are well connected over land. So it's kind of by ship or by not." That region is also a large producer of aluminum, particularly in Bahrain and the United Arab Emirates. Like plastic, aluminum has become an incre...
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