Recently, discussions around naphtha seem to be taking on a slightly different tone. Naphtha is a petroleum-derived material used as a feedstock for a wide range of products, including plastics, synthetic fibers, coatings, and adhesives. For many companies, it has long been treated as a given—something that can be procured as needed.

But is that assumption as stable as we have believed?

Amid rising geopolitical tensions, particularly surrounding Iran, risks related to the Strait of Hormuz and the possibility of strengthened sanctions are increasingly being discussed as realistic scenarios. If such conditions were to persist, the impact may extend beyond oil prices to the supply of petrochemical feedstocks themselves.

Naphtha is one such material that sits directly within this risk zone. When its supply is disrupted, the effects are unlikely to remain confined to a single industry—they may ripple across entire supply chains.

Can This Be Seen as a Question of Assumptions, Not Just Prices?

Historically, risks associated with naphtha have largely been framed in terms of price volatility.Indeed, fluctuations in crude oil prices—and the resulting cost impacts—are something most companies are accustomed to managing.

At the same time, there has often been an implicit assumption that, even if prices rise, the material itself will remain available in the quantities required.
Procurement plans, cost structures, and pricing negotiations are, in many cases, built upon this assumption.

However, in situations like the current one—where the availability of supply itself becomes uncertain—it may be necessary to reconsider that very foundation.

The difference between “price volatility” and “supply instability” is not a minor one. It has the potential to fundamentally alter how companies respond.

What Geopolitical Risk Reveals About Structural Instability

The situation in the Middle East is often understood not as a short-term fluctuation, but as a structurally complex and inherently unstable environment. Religion, ethnicity, energy interests, and geopolitical power dynamics are deeply intertwined, making future developments difficult to predict.

The Strait of Hormuz is considered a strategic chokepoint, with roughly 20% of the world’s oil passing through it. When risks to this route are discussed as plausible scenarios, the implications extend beyond crude oil to include naphtha and liquefied natural gas.

In this sense, the assumption of stable availability appears to be more dependent on external conditions than it may have seemed.

Why This May Also Be a Sustainability Issue

Many companies are advancing efforts toward decarbonization—addressing Scope 1 and 2 emissions, while also expanding into Scope 3 and broader supply chain visibility.

However, if the core materials underpinning a business remain heavily dependent on fossil-derived inputs such as naphtha, this raises additional questions.
Given that a significant portion of Scope 3 emissions originates from raw materials, this dependency may warrant reconsideration—not only from an environmental standpoint, but also from the perspective of supply stability.

Moreover, geopolitical risks like those currently emerging often manifest as a combination of environmental, social, and economic factors.

Seen in this light, the issue of naphtha may not be merely about resource procurement. It may also connect to a more fundamental question: “whether the assumptions underlying a business can continue to hold over time.”

Commonly Overlooked Points

In practice, several recurring patterns can be observed.

One is that the potential for alternative materials is not always fully explored. Options such as bio-based feedstocks or recycled materials are often treated as longer-term considerations, which can delay action and limit future choices.

Another is the tendency to view risk primarily through the lens of cost. When discussions are confined to price management, it becomes more difficult to ask whether continued reliance on a given material is appropriate in the first place.

A third is the gap between ESG discussions and procurement strategies. Even when supply chain risks are documented in disclosures, they are not always fully integrated into day-to-day decision-making.

A Possible Shift in Perspective

In this context, a shift in perspective may be required.

One such shift involves reconsidering material selection itself as part of strategic design. Supply chain visibility is only a starting point; what follows is how those insights are translated into decisions.

Another involves using risk not only for disclosure purposes, but as an input for management decisions.
When identified risks are reflected in procurement policies and investment choices, they can contribute to strengthening organizational resilience.

While it may be difficult to predict geopolitical developments with precision, it is still possible to design structures that are better prepared for uncertainty.

Bridging Practice and Disclosure

In many cases, gaps emerge between sustainability teams and procurement or manufacturing functions. Bridging these gaps may require the development of a shared language and structural alignment.

At Neuromagic, we support organizations through approaches such as:

• Aligning supply chain realities with external frameworks such as CDP and EcoVadis
• Structuring risks based on materials and processes
• Designing ways to communicate initiatives clearly to stakeholders

A key focus is ensuring that disclosure and operational decision-making are not treated as separate tracks.

Reconsidering Assumptions

The issue of naphtha may no longer be limited to fluctuations in cost.
It can serve as an opportunity to revisit the assumptions upon which a business is built.

If sustainability is understood not only as reducing environmental impact, but also as ensuring that business foundations remain viable over time, then external disruptions like these may offer a moment to reflect.

Will the current material structure still be explainable ten years from now?　　　　Will the assumptions behind it continue to hold?

As a Starting Point for Reframing the Structure

When beginning to review supply chains or material dependencies, it may not always be clear where to start.

At Neuromagic, we work alongside organizations to structure their current state, visualize risks, and design pathways that connect to decision-making—tailored to each theme and phase.

Starting with a simple review of the current situation can be a meaningful first step.
Please feel free to reach out to us.

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