Fresh from sending oil prices soaring, Middle East tensions have now set aluminium on fire. Over the weekend, Iranian drone and missile strikes hit two of the Gulf’s largest aluminium producers, triggering panic over a global supply crisis.
On Monday, the London Metal Exchange’s three-month aluminium contract jumped as much as 5.5% to hit $3,492 per tonne – its highest level since April 2022. Since the conflict erupted on February 28, aluminium has gained a cumulative 10%, echoing but not matching crude’s record monthly surge of over 60%. The message is clear: the “war premium” has now spread decisively to base metals.
EGA’s CEO, Abdulnasser Bin Kalban, said: “The safety and security of our people is our top priority at all times. We are deeply saddened and are assessing the damage to our facilities.”
The Gulf region accounts for about 9% of the world’s aluminium supply. With Iran effectively closing the Strait of Hormuz, local producers have been unable to ship their metal to global markets.
Joyce Li, commodities strategist at Macquarie Group, noted that even before the attacks, their base case assumed a 20% cut to current running capacity – equivalent to 800‑900 kilotonnes of production loss in 2026. “This attack is sufficient to push the global market into a full-year deficit,” she said, adding that the team is closely monitoring the “fluid” situation.
ING Economics warned: “The latest attacks increase the probability of a prolonged disruption scenario, where supply losses could persist even if geopolitical tensions ease, reinforcing upside risks to prices.”
April Kaye Soriano, aluminium research analyst at S&P Global Energy, described the strikes as sending “shockwaves through the global aluminium market, raising the risk of a supply crisis that could reshape the industry.” If the damage proves lasting, she said, the market could move away from temporary softness and begin to reflect expectations of tighter supply and higher prices.
China is the world’s largest aluminium producer, but it has long capped annual capacity at 45.5 million tonnes to curb emissions and prevent overcapacity. Some believe Beijing could step in.
“If the Chinese government decides that the prices are too high, they can restart a number of idle smelters in the country and the world will be full of aluminium,” Artem Volynets, CEO of miner ACG Metals, said on March 18.
However, S&P Global’s Soriano sees China’s ability to ramp up as “limited.” “While there is some capacity to increase output, the global market remains exposed to further shocks, especially if the conflict spreads to other metal supply chains,” she added.
