High oil prices and plastic recycling: why the circular economy is becoming strategically more important

March 19, 2026

Recent geopolitical developments have once again highlighted the vulnerability of global raw material and energy supplies. The Iran war and the resulting oil prices exceeding $100 per barrel demonstrate the continued heavy reliance of Western industrialized nations on fossil fuels. Such price shocks have a direct impact on many industries—including plastics production—that are directly dependent on developments in the oil and gas markets. Rising energy and raw material prices therefore not only increase the production costs of virgin plastics but also bring alternative raw material sources into sharper focus.

At the same time, it is becoming clear that the question of increased recycling, resource efficiency, and renewable energies has long since moved beyond the ecological niche. It is increasingly also a question of economic resilience and strategic security of supply.

Even though oil price spikes are mostly triggered by geopolitical events, there is much to suggest that the long-term trend towards scarcer and more expensive fossil fuels will continue. Against this backdrop, plastics recycling is gaining new strategic importance – despite all the current challenges facing our industry.

Expensive oil – short-term effect or structural trend reversal?

Theoretically, high oil prices improve the competitiveness of recycled materials compared to newly produced plastics. When the costs of fossil raw materials rise, the use of recyclates becomes more economically attractive.

However, a look at the past also shows that commodity markets can be subject to strong fluctuations. Geopolitical tensions, production policies, or economic developments repeatedly lead to price movements both upward and downward.

Therefore, what matters is not just the short-term oil price, but the long-term trend. Many analysts assume that geopolitical uncertainties, rising production costs, and the global energy transition will likely increase market volatility in the future.

For industrial companies, this means that access to alternative raw material sources – including recycled materials – is increasingly becoming a strategic factor.

I have been convinced for years that recycling is more than just an environmental issue. It is increasingly becoming a strategic factor for security of supply and the economic resilience of industrialized countries.

Cyrill Hugi, Chairman of the Board of Directors of the enespa Group

Cheap plastic and recycled material imports are still holding back the recycling industry.

Despite current price fluctuations, the economic reality for many recycling companies remains challenging. In recent years, fossil raw materials were often so inexpensive that producing new plastic was more economically attractive than using recycled materials.

As long as virgin plastics remain highly competitive in terms of price, recycled materials struggle to gain a foothold in the market. This has led to global plastic production remaining at a very high level – already more than 460 million tons of plastic are produced every year, and this figure continues to rise.

In addition, European recycling companies are increasingly under pressure from imported recyclates from other regions of the world, primarily from Asia. These materials are often offered at significantly lower prices, due in part to differing regulatory frameworks, energy prices, and production costs.

This creates intense competition for recycling companies in Europe, Germany or Switzerland, which can make investments in new plants and technologies more difficult.

Politicians are increasingly taking countermeasures with stricter regulations.

This has prompted political action, which has significantly increased pressure in recent years: In Europe, regulatory initiatives are now driving the development of the circular economy considerably. The European Union is focusing on binding recycling quotas, minimum recycled content in products, and stricter packaging requirements.

New initiatives are also emerging at the national level. In Switzerland, for example, an industry-wide approach for the collection and recycling of plastic packaging is currently being developed.

These regulatory developments will create a more stable framework for investments in modern recycling infrastructure in the long term.

Technological progress as a "game-changer" for plastics recycling

At the same time, the industry is undergoing a technological transformation. For a long time, plastics recycling was primarily limited to mechanical processes in which materials were shredded and remelted. This traditional recycling often led to so-called downcycling, in which the material quality decreases with each reuse.

However, new technologies of so-called advanced recycling open up additional possibilities. Processes such as pyrolysis, solvolysis, or other chemical recycling processes can break down plastics back into their original chemical building blocks.

This process generates raw materials that can be reused to produce high-quality plastic products. These technological advances not only make recycling more environmentally friendly, but also more economically attractive in the long run.

Why the long-term prospects for recycling remain strong

In summary, various structural developments suggest that plastic recycling will grow significantly in the long term:

increasing raw material shortage
geopolitical risks in energy supply
growing political pressure towards a circular economy
Sustainability strategies of large industrial companies
technological innovations in the recycling sector

Companies are increasingly recognizing that access to recycled raw materials can be a strategic advantage – not only for environmental reasons, but also to secure their supply chains.

How enespa supports companies on their path to a circular economy

In the evolving market environment, enespa supports companies along the entire value chain of plastics recycling. Our range of services extends from consulting and concept development to the planning and construction of modern recycling plants, as well as support with permitting processes, training, and the handover of turnkey facilities. We thus accompany our customers from the initial idea to operational completion.

We believe that the recycling industry is currently at a turning point: While the framework conditions may be difficult in the short term, there are many indications that the market for modern plastics recycling will grow strongly in the coming years.

Enespa has also successfully completed its development phase and is increasingly evolving into an internationally active industrial company. Our goal is to create solutions together with partners and customers that are economically viable and at the same time make a genuine contribution to the global circular economy.

The coming years therefore promise not only challenges – but also enormous opportunities for innovation, collaboration and sustainable growth.