Current geopolitical conflicts are impacting roughly 30% of the world’s oil and gas production—a level not seen since World War II. The toll is particularly heavy on footwear, where oil is not just a transportation cost, but embedded throughout the entire supply chain from material costs to factory operations to logistics.
According to a recent report from Footwear Distributors & Retailers of America (FDRA), if oil prices remain above $90 per barrel—a 25% increase from late February 2026 levels—for an extended period, costs will accelerate across supply chain layers.
Price increases might have been easier to absorb in previous disruption cycles, but today’s footwear manufacturers are already battling tight margins and ongoing tariff pressures, and it’s making for some heavy discussions with suppliers.
“Everyone I talked to in the sourcing space is talking to their suppliers about what price increases look like and what to expect,” said Matt Priest, FDRA president. “And it’s kind of adding insult to injury because we just had the consumer price index numbers come out last week, and prices on footwear are up because of the tariff policy, before any of this [oil price increase] is accounted for. So it’s not going to be a pretty picture over 2026 as this conflict continues to keep oil at $90 a barrel or more.”
The report laid out how oil prices and the war in the Middle East will translate into higher footwear prices, at every step along the supply chain.
Oil: A Key Component
One of the most misunderstood aspects of oil’s influence on footwear is its role in materials. While the effect on freight costs is obvious, oil is actually a key input in today’s footwear. Oil is a direct feedstock for 30% of the materials and components for a basic synthetic shoe. Another 40% of that same shoe’s materials has some exposure to oil rate swings. Together, this means total basic shoe materials could have around 70% exposure to oil price swings, costs seen in T4-T2, according to the report.
Footwear production is uniquely sensitive to these changes because of its complexity. “Shoes aren’t shirts,” is a common industry refrain, as a pair of shoes may contain more than 70 different materials and components, compared to 5 or so for a t-shirt. Plus, the diversity of footwear’s petrochemical-derived inputs—EVA and polyurethane foams for cushioning, synthetic textiles like polyester and nylon, rubber compounds for outsoles and varied adhesives and plastics—raise exposure to oil price volatility.
At Tier 4 and 3, oil serves as a direct feedstock for producing key inputs such as ethylene and propylene. Price increases at this stage can be rapid, with short-term spikes pushed to Tier 2 at rates as high as 7% to 9% for every 10% increase in oil prices. These costs are typically transmitted to material suppliers within 4 weeks, depending on inventory levels and contract structures.
Tier 2 material suppliers have less exposure to oil volatility than Tier 3, stated the report, but are still moderately high (60–75% of inputs for material development are petrochemical-based, and 25–40% of those input costs are directly tied to crude oil). Estimates suggest that for every 10% rise in oil prices, material costs at this stage could increase by approximately 1.5% to 2.5%. These changes typically reach manufacturers within one to two months. “This is when your supplier comes knocking, saying, ‘hey, my costs are going up,’” said Priest.
Manufacturing
Footwear manufacturing is also energy intensive. According to The Footwear Innovation Foundation’s Carbon Report, approximately 87% of factory energy consumption comes from electricity. In many production regions of Asia, electricity prices are closely tied to oil and natural gas markets, sending energy costs rising in tandem with fuel prices. Additionally, 10% of factory energy use comes from diesel and liquefied natural gas, which are immediately affected by oil price increases.
At the worker level, higher fuel costs also affect transportation to the factory, which can lead to labor disruptions or demands for higher wages. In extreme cases, fuel shortages or energy rationing could limit factory output or disrupt the movement of goods within the supply chain.
Logistics
Freight and transportation costs respond quickly to rising fuel prices, often in real time. Ocean shipping rates have already begun to climb, while trucking and drayage costs are increasing through fuel surcharges tied to diesel prices. These surcharges can add significant costs per mile or per container, compounding the overall financial burden on importers and retailers.
The report projected that FOB costs per pair could rise by approximately 1.5% to 3% by mid- to late-summer 2026 (Fall/Winter retail).
A sneaker that was $20 FOB in February 2026 that had $10 worth of materials would ultimately cost $20.30 FOB by mid/late-summer, factoring in a sustained 25% increase in oil prices along with additional increases suppliers might add as a buffer. That supply chain calculus assumes a 40% absorption rate from T4-T1 and the brand.
This may appear modest, but footwear operates on thin margins with highly competitive pricing. Plus, there’s no guarantee oil prices won’t remain elevated or even rise further.
At the final end of the supply chain is a “worn-out consumer” feeling the pain at the pump, the grocery store and everywhere else. And while shoppers are still buying, at least for now, “you can only push them so far before they walk away,” said Priest.
“We were seeing a growing economy and resilient consumer because there was this commitment, or this promise politically, that in spite of the tariffs, energy prices would come down,” he said. “And now that argument’s gone.”
