The escalating tensions surrounding the US-Israel conflict with Iran percolating down to the entire Middle East have triggered economic shockwaves across the globe. Aluminium and oil sectors are particularly vulnerable, and for obvious reasons. The Middle East is a pivotal region in aluminium production and oil extraction and also controls the world trade of these two commodities through the Strait of Hormuz, one of the most critical maritime shipping routes connecting the Persian Gulf to the Gulf of Oman and the Arabian Sea. Annually, the Strait of Hormuz handles an export volume of 5.14 million tonnes of primary aluminium, accounting for around 75 per cent of the region’s total production. Additionally, it serves as the passage for 20 to 21 million barrels of crude oil and petroleum liquids daily, representing 20 to 30 per cent of global consumption.

The effect of the Strait of Hormuz closure is already being felt

On the news of the closure of such a critical trade route, the fear of supply chain disruptions of both aluminium and oil intensifies, leading to a record surge of commodity prices. On March 2, primary aluminium price on the London Metal Exchange gained 2.17 per cent overnight, reaching USD 3,226 per tonne, up by 5 per cent over a week from USD 3,077 per tonne. On the other hand, crude oil price rose 3.84 per cent from the previous day, standing at USD 80.93 per barrel as of March 3, 2026.

Why is the impact so intense in the aluminium market?

The Middle East is a global leader in primary aluminium production, contributing nearly 10 per cent to the world’s output. A lion’s share of production in the Middle East is concentrated in the UAE, Bahrain, Saudi Arabia, Oman, Qatar, and Iran. Barring Iran, the other GCC countries produce over 6 million tonnes of primary aluminium, while Iran alone produces over 550,000 tonnes of metal annually. So, overall, the region churns out more than 6.5 million tonnes of primary aluminium, which are destined primarily to the United States and Europe.

Together from Bahrain, Qatar, and the UAE, the United States imported 497,000 tonnes of primary aluminium in 2024, which was nearly 14 per cent of the United States’ total primary metal imports. Separately, from Oman and Bahrain, the United States also secures 112,800 tonnes of aluminium plates, sheets and bars, according to the US Geological Survey data.