Aluminium: Another Commodity at Risk
Aluminium, a commodity that is at significant risk due to the ongoing Iranian war, has emerged as a critical flashpoint in global supply chains. The conflict between the US, Israel, and Iran has directly and indirectly disrupted Middle Eastern aluminium production; a region accounting for roughly 9% of global output. In March 2026, Iranian missile and drone strikes targeting key facilities in the Arabian Gulf triggered production disruptions across the region.
This has tightened an already fragile global supply chain. London Metal Exchange (LME) aluminium prices surged to four-year highs at around $3,500 per tonne, with sharp spikes following the strikes. Arabian Gulf producers – major exporters to Europe, the United States, and Asia – have seen shipments halted. In addition, the effective closure and heightened risks around the Strait of Hormuz have further complicated the movement of raw materials like alumina and bauxite, leading to significant capacity reductions.
Aluminium is essential for vehicle lightweighting, aircraft manufacturing, renewable energy infrastructure (such as solar frames and wind components), and consumer packaging. Elevated costs and potential shortages will ripple into key sectors globally, with the automotive, aerospace, defence, packaging, and construction industries expected to be among the most affected. Increasing manufacturing costs across these sectors will contribute to broader inflationary pressures and squeeze margins for industries already managing tight inventories.
It is estimated that millions of tonnes of potential output are at risk in 2026, which exacerbates vulnerabilities previously exposed by trade tensions and energy volatility. Downstream effects are likely to include higher prices for cars, commercial vehicles, beverages, canned goods, solar panels, electronics, and building materials. Import-dependent regions and manufacturers with limited ability to pass on costs will face the greatest challenges.
While some producers are exploring alternative shipping routes via Oman or the Red Sea, the conflict underscores the strategic fragility of concentrated supply hubs. As the war persists, aluminium joins oil, gas, and other critical commodities in highlighting how geopolitical shocks in the Arabian Gulf can swiftly transmit instability worldwide. For companies, rethinking new sourcing strategies, aggressive stockpiling, and accelerating diversification efforts are critical to mitigate long-term risks. However, early signals point to prolonged market tightness and elevated costs across global markets.
Ali Ebrahim Faqeeh, Senior Analyst in Economic Studies Program
