A surge in fossil fuel ⁠prices since the Iran war is squeezing polyester suppliers and garment makers across India ⁠and Bangladesh, threatening to raise costs for fast-fashion retailers like Zara and H&M.

Filatex, one of India’s biggest polyester yarn producers, is paying nearly 30 per cent more for the petroleum-derived feedstocks – purified terephthalic acid (PTA) and monoethylene glycol (MEG) – that it needs to make yarn, as Chinese suppliers raise prices and Middle East supply is disrupted,...