The global economy is staring at a supply shock triggered by a waterway barely 33 kilometres wide at its narrowest point. The Strait of Hormuz, sitting between Iran, Oman and the United Arab Emirates, has become the most dangerous chokepoint in global trade since the beginning of March.

The waterway handles roughly 20 per cent of global seaborne oil flows, but its role in the aluminium value chain is increasingly critical. The Middle East now hosts around 7 million tonnes of aluminium smelting capacity, equivalent to about 9 per cent of global supply.

When shipping through Hormuz slows, it affects two directions simultaneously:

• Raw materials moving into Gulf smelters
• Finished aluminium moving out to global buyers

In the past two weeks, vessel-tracking platforms and maritime insurers have flagged an unusual development: hundreds of ships are avoiding the Gulf entirely. Across energy, metals and container cargoes, over 3,200 vessels representing roughly 4 per cent of global shipping tonnage are now idled or rerouted around the Persian Gulf, while hundreds more wait offshore near Oman and the UAE.

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Ship’s war premium cancelled, cost inflated

Shipping is the first casualty in a geopolitical crisis. And, the aluminium supply chain is particularly sensitive to freight disruptions.

Major carriers, including Maersk and Mediterranean Shipping Company, have temporarily halted bookings for cargo moving into several Gulf ports, including the UAE, Qatar, Kuwait, Bahrain and Saudi Arabia.

When ships do enter the region, they are doing so at a cost. War-risk insurance premiums and fuel costs have surged sharply as vessels are forced to sail longer routes.