Pain Starts Upstream
No oil, no pills.
Six carbon atoms sit at the foundation of modern pharmaceuticals. The benzene ring is one of the most prevalent scaffolds in medicinal chemistry, appearing in well over half of small-molecule drugs. Building these drugs around the benzene ring means they’re mimicking biology’s motifs for optimal binding, rather than introducing foreign structures.
Benzene-derived drugs keep Europe’s ageing population alive at a scale that is easy to underestimate. Statins taken daily by tens of millions of cardiovascular patients, many targeted cancer therapies, and the most commonly prescribed antidepressants frequently incorporate it as a core structural element. These benzene‑centered scaffolds characterize some of the highest‑volume, highest‑dependency drug classes in European healthcare.
Benzene does not occur in nature at industrial scale but is derived from crude oil. Unsurprisingly, the Hormuz disruption is already moving through the benzene supply chain. The most visible early signal comes from India, the cornerstone of global generic drug supply.
The prices of certain key raw materials have risen by more than 60%, according to data reported by The Economic Times, and industry bodies are warning governments of emerging shortages in antibiotics, antidiabetics, and cardiovascular medicines. Many companies still have months of inventory. But that buffer is the only thing standing between the current disruption and visible consequences.
Europe suffers from the same feedstock dependency. Crude oil enters a refinery and gets broken down into fractions, among them naphtha. That naphtha feeds petrochemical crackers, which produce benzene as a co-product. Roughly 70% of Europe’s benzene supply comes from domestic sources running this chain. The full impact of the Hormuz disruption will only be visible in the coming months. After the strait closed, tankers still in transit kept arriving for weeks, masking the disruption like air trapped in a pipe. Now that air has reached the end. Europe is drawing on strategic reserves of crude and oil products, with no reliable picture of how much remains.
What is clear is that refineries cannot simply run lean in response: below roughly 60% throughput, operations become technically unstable and economically unviable. The plant shuts entirely rather than dimming: no linear decline but a step function below the threshold. When Hormuz settles, the infrastructure to restore European benzene supply may not be what it was. Time to take a closer look at what this means for Europe’s pharmaceutical security of supply.
The Hormuz disruption has started to hit refiners around the time JP Morgan’s shipping analysis marked as the day the last pre-closure tankers from the Persian Gulf reached European ports. European refining margins turned negative on April 6: minus $6.45 per barrel for the benchmark hydroskimming configuration, according to IEA data cited by Reuters. Sparta Commodities estimates that European runs could fall by as much as 500,000 barrels per day as refineries cut throughput to avoid running at a loss. However, the input shock is only half the story.
European refineries were under pressure before the first Hormuz tanker was threatened. The EU’s climate legislation—the Emissions Trading System, Fit for 55—has been systematically eroding the economics of European refining for years. Staying competitive against Gulf and Asian producers carrying none of the carbon cost burden makes the economics worse still. The result was a refinery industry running on shrinking margins before crude prices spiked.
The problem for non-combustion uses of oil is that refineries have no off switch for individual products. Process a barrel of crude and you get everything at once: jet fuel, diesel, naphtha, bitumen, and the aromatic fractions that feed the chemical and pharmaceutical industries. The ratios are determined not by procurement decisions but by physics. A refinery is a column: heat crude from the bottom, different molecules rise and condense at different temperatures, each fraction emerging at its own level. That’s why a refinery works only if the economics for all outputs make sense. Naphtha—the refinery fraction required for benzene output—dims with everything else.
The effective combustion engine ban from 2035 poisoned long-term investment decisions too. No board approves a decade-long capital commitment when politics have scheduled your product for elimination. The attempt to render European refining unprofitable has proven successful: Shell shut down crude processing at its Wesseling refinery in Germany in March 2025. BP cut roughly a third of capacity at Gelsenkirchen. Petroineos converted Grangemouth—the only refinery in Scotland—into a fuel import terminal. Eni shuttered Livorno. ExxonMobil closed Slagen in Norway. Nearly 400,000 barrels per day of European refining capacity disappeared in 2025 alone. Each closure was reported as an energy story. The benzene column was on hardly anyone’s radar.
The IEA estimates that up to 1.5 million barrels per day could follow by 2030. According to the most recent Statistical Review of World Energy, Europe’s total refining capacity stood at 15 million barrels per day in 2024, making this a 10% cut. That doesn’t sound too dramatic. But this estimate was made before Hormuz hit.
Until recently the picture looked very different. In September 2025, European benzene was in oversupply, prices had fallen 27% from the prior year, and the market consensus was that only cracker capacity closures would drive recovery. Since Hormuz, prices have climbed. The market is getting the recovery it called for, just not the way it had in mind.
One optimistic objection is that industry will find bio-based routes to benzene that bypass fossil feedstocks entirely. But the naphtha that produces benzene rises from the refinery column as a co-product of processes driven by other economics. A dedicated bio-based facility would have to price against benzene emerging from that already-running chain. That competition has never been won. Instead of creating an opening for domestic replacement production, European closures create a dependency on whoever controls the remaining throughput.
The problem may be easy to dismiss given that the cost of raw benzene is a fraction of total pharmaceutical manufacturing expenditure. But so is the cost of rare earths in a weapons system. Price doesn’t reflect the importance of key inputs. The usual strategic miscalculation follows: once the production chain is dismantled, rebuilding it takes decades, which directly undermines Europe’s post-COVID push to reshore pharmaceutical supply chains.
Europe’s ageing population will not run out of statins or cancer therapies tomorrow, but the trajectory is set. Every refinery that closes removes another column from the system. The fantasy that Europe can dismantle the fossil fuel infrastructure it disapproves of while retaining the pharmaceutical feedstocks it depends on collides with a basic reality of chemical engineering.
Pharmaceuticals are one of the few industrial sectors where Europe still holds a genuine competitive edge in research, manufacturing, and export capacity. It survived the hollowing out of steel, semiconductors, and solar. What follows from wilful refinery attrition is a slow transfer of structural power that puts this last stronghold at risk.
None of this was unforeseeable. The Hormuz chokepoint has appeared in every energy security analysis for thirty years. The refinery closures were announced publicly in advance. The benzene dependency was not a secret.
Whether the next pharmaceutical supply disruption traces back to benzene feedstock is now a question worth asking. Mitigation is still possible, but only if the political will exists to reverse a decade of refinery attrition. Rational governments would act. The EU’s track record suggests otherwise. Policy irrationality, when it is this predictable, is itself a tradable opportunity.
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yet another step on the way to making Europe the third world. Rather sad really, but self inflicted injuries always are.
Another bit of insight as you do so well. Energy literacy is remarkably low…. A week or 2 without electricity would improve energy literacy quickly, so would a few weeks without any pills, plastics, modern clothing, etc