In February 2026, conflict in the Middle East led to the near-total disruption of shipping through the Strait of Hormuz and did something far beyond what most economic forecasts had anticipated. The World Bank proclaimed the largest oil market disruption in history and, by the end of March, the price of Brent crude oil had climbed by around 65% – its steepest monthly rise on record. Global oil supply fell by more than 10 million barrels a day.
For packaging brand owners, the resultant shockwaves present a growing challenge – the cost of fossil-based packaging material is increasingly being set by forces far beyond the control of any procurement team.
This is because most flexible plastic begins as crude oil. It is then refined into naphtha, cracked into ethylene and propylene and converted into the polyethylene, polypropylene and PET that wrap food and consumer goods across Europe. When the feedstock moves, every link in the chain moves with it.
The price of polyethylene resin – the polymer widely used in packaging – rose an estimated 70 to 80% in European spot markets between February and April, according to the UN Trade and Development (UNCTAD). Reuters reported that the conflict had “choked petrochemical supply” and lifted plastics to roughly four-year highs. Even the US – partly cushioned because its resin relies more on domestic natural gas than on imported oil – watched that insulation erode as export demand pushed its plants beyond 90% capacity. In 2026, it seems, there is no comfortable distance from disruptive geopolitical events.Cost up, predictability of supply down
The bigger problem in all this may not be the cost of price increases. The bigger problem could be unpredictability. At the end of March, European Plastics Converters – the trade body for a sector of more than 50,000 companies turning over €300 billion a year – declared an “emergency situation for converters.” Its members were reporting not only sudden cost increases but also instability in supply and a breakdown in the planning predictability upon which continuous production depends. Put simply, converters were finding that securing fossil-based packaging material had become as difficult as paying for it.
All this is not necessarily set to be only a short-term inconvenience. Goldman Sachs has suggested Brent could average above $100 a barrel across 2026 if the Strait stays largely closed, while Wood Mackenzie warns that intermittent disruption may persist even after the Strait reopens. That leaves a geopolitical risk premium attached to anything oil-derived. And this isn’t the first time that this has happened – as Packaging Europe notes, Red Sea shipping disruptions pushed up European flexible-packaging prices as recently as 2024.
The pattern here is the point. The fragile feedstocks that nurture the fossil-based flexible packaging market carry a structural fragility – one that is amplified with every shock to global energy markets.
Obtaining an accurate cost calculation
Today’s packaging converters and flexible-packaging-reliant brands don’t have to remain exposed to an ever-evolving crisis. There are alternative options offering greater predictability and resilience. Among these paper-based packaging stands out for being less dependent on global feedstock supplies – and often less costly overall.
In the past, when comparing packaging materials the conversation has often started and ended with the simple – at first sight – cost of the substrate. Because paper has traditionally cost more per square metre than the likes of flexible plastic film, such past conversations have been over quickly.
But as is explored in detail in Sappi’s new Ready Made guide to the key issues in packaging today, the traditional cost comparison between a flexible plastic film and a paper-based material leaves out a long list of costs that change the picture completely for today’s brands and converters. And that’s even before factoring in the effects of the recent oil price shocks.
Today, any complete picture of projected packaging costs must also include the likes of extended producer responsibility (EPR) fees, single-use plastic levies, the cost exposure of a low recyclability claim on-shelf, and the brand and reputational risk of being out of step with consumer expectations.
As the charts below show, even narrowing down that list of projected costs to just substrate, EPR fees and plastic taxes still reveals a surprising difference in total cost of ownership when comparing plastic and paper packaging solutions. When the effects of the disruption in the Straits of Hormuz are factored in, the cost difference becomes stark. Paper can clearly provide a better solution to the problem of cost.
These graphs are produced by a tool called the Sappi EPR and carbon footprint simulator. For brands and converters weighing the merits of switching to a more sustainable packaging solution – one ready to cope with the demands of complex PPWR legislation in the EU, for example – this tool can readily calculate the total cost of ownership of a current packaging solution against a proposed paper alternative.
The simulator also compares the CO2 footprint of the proposed solution versus the incumbent – and there are more benefits to discover through the pages of the new Sappi Ready Made guide to packaging’s most pressing issues.
A demonstrably secure alternative
If paper packaging as a lower cost option comes as a surprise, paper packaging as a more secure option certainly shouldn’t. The latest tensions in the Middle East act as a reminder that geopolitical risk is no longer an occasional business worry, but something integral to our new common operating environment.
Which is why brands are increasingly considering resilience and security of supply alongside cost and sustainability factors.
European paper’s raw material is not shipped through a narrow, contested waterway. It is grown responsibly in forests – local forests. European paper mills source around 90% of their raw material from European forests – forests that boast the highest levels of independent, sustainable certification of anywhere in the world. (No other raw material has such established sustainability standards and chain of custody mechanisms.)
This is a renewable resource supply chain anchored somewhere considerably more secure and sustainable than a far-off shipping lane for finite fossil-based materials. This is a robust European network that feeds a ready-made solution to a problem few saw coming – but that forward-thinking packaging paper manufacturers such as Sappi are more than ready to mitigate.