European chemical companies face mounting pressure to raise prices by over 5% in the next year as oil and gas costs surge, J.P. Morgan warned. Brent crude has climbed roughly 35% since late December 2025, while European TTF natural gas has soared about 84%, driven by Middle East supply disruptions.

In a scenario where energy prices persist and only half of cost increases are passed to customers, J.P. Morgan estimates 15% to 25% downside to Bloomberg FY27 adjusted EBITDA consensus for the most exposed companies. Lanxess, BASF, Arkema, Evonik, and Wacker face the greatest headwinds, with Lanxess carrying the steepest exposure at 62.4% of 2026 consensus EBITDA from oil-based raw materials.

Yara faces the biggest unhedged energy burden, with higher EU gas costs equivalent to 20% and 22% of 2026 and 2027 EBITDA respectively. The fertilizer producer requires an 11% European price increase in both years to break even on costs. With EU gas storage at its lowest seasonal level since 2019 and limited short-term supply increases from Norway, Russia, and Algeria, chemical companies face a challenging pricing environment ahead.