How events in the Middle East are a supply stress test for the world’s cables

Ongoing events in the Middle East are sending shockwaves through the global natural resources industry. The flow of key feedstocks such as naphtha is disrupted, which, as critical input for steam cracking, is driving knock-on supply chain issues across the global petrochemical sector.

Reduced availability and higher costs of derivatives have led to shortages of essential polymers, including polyvinyl chloride (PPVC), polyethylene (P), polypropylene (PP) and polyamides (PA) — materials that are at the core of insulation compounds and other components required for cross-linked polyethylene (XLPE) cable production.

This tightening of raw material supply is exposing the fragility of the global cable supply chain. While Europe remains comparatively insulated, Asia, which heavily depends on Middle Eastern naphtha supplies, has already been hit with delays and cost pressures.

According to a KEPCO official, "currently, we have secured raw material inventory equivalent to 3.2 months of supply”, a clear illustration of supply vulnerability, with the company declaring an emergency just over a month after the onset of the Middle East conflict. Key suppliers have already notified KEPCO of potential disruptions to cable production.

The speed at which these supply constraints have emerged highlights how little buffer capacity exists within the system and underscores the heightened sensitivity of cable manufacturing to geopolitical disruption.

While an abrupt and unforeseen supply collapse is unlikely, reduced availability and pricing volatility are already affecting project timelines, procurement strategies, and contract negotiations.

Build resilience: Test your risk framework

Does your risk framework address scenarios that would have been unanticipated 12 months ago?

KEPCO’s announcement highlights the potentially severe consequences of enterprise risk management frameworks that do not evolve to address the full spectrum of supply chain risk. It underscores the need for senior leadership to rigorously test resilience against low‑probability, high‑impact disruption scenarios.

Answer these key questions to test your company’s resilience:

Supply chain visibility and concentration

• How frequently are critical suppliers reviewed, and to what level of depth? Do we have sufficient visibility of second‑ and third‑tier dependencies, and are we indirectly exposed to single‑supplier risks?
• Are we over reliant on any one supplier, contractor, or geography, and on what criteria were these relationships established?

Financial and contractual exposure

• Do we have defined financial exposure limits to any single supplier? Are these actively monitored?
• Do our supply and customer contracts include sufficiently flexible and enforceable force majeure provisions? Which penalties apply and are they capped?
• Are lenders involved and what obligations require notifications with what reactions?
• How are any current claims impacted?

Contingencies and resilience

• How quickly could alternative suppliers be qualified and mobilized in the event of disruption?
• Are we maintaining adequate strategic stockholding to cover reasonable loss scenarios at key suppliers, such as sufficient spare cables, critical components, and accessories to manage extended outage or repair scenarios? Do we have sufficient onsite or offsite storage capacity?
• Are commercial pressures driving an overreliance on just‑in‑time supply chains, at the expense of resilience?

Operational continuity

• Does the transmission network incorporate sufficient redundancy to withstand prolonged repair or replacement timelines?
• Do current order backlogs and future project portfolios allow flexibility for emergency reprioritization?

Critical logistics and delivery risks

• Do we have credible contingencies in place for specialist assets, including installation and repair vessels?

The Middle East conflict is acting as a stress test for global cable supply chains, rapidly translating upstream disruption into pricing pressure and supply volatility.

While these impacts fall short of systemic failure, they demonstrate how quickly latent dependencies can become strategic risks. For senior leadership, this underscores the need for forward‑looking risk frameworks that reassess supply chain exposure and resilience amid evolving geopolitical conditions.

To find out how to build a robust and resilient risk strategy, contact our team.