As oil surged, another commodity quietly caught fire in Iran war
Global attention has largely focused on the surge in oil and gas prices following the US-Israeli war against Iran. But another commodity is quietly becoming one of the biggest casualties of the conflict — aluminium. Prices of the metal have surged to four-year highs as the effective shutdown of the Strait of Hormuz disrupts trade flows from the Gulf, a region that has become a critical supplier to Western markets. Benchmark aluminium on the London Metal Exchange briefly touched $3,544 a metric ton on Monday, the highest level since March 2022, before easing slightly to around $3,394 a ton, according to Reuters. The rally reflects mounting concerns that prolonged shipping disruptions could choke off supply in a market that was already tightening before the conflict began. The crisis highlights how geopolitical shocks in the Middle East can reverberate far beyond energy markets, rippling through global industrial supply chains that rely heavily on Gulf aluminium exports. Aluminium faces squeeze The Strait of Hormuz is one of the world’s most critical maritime passages. While it is widely known as a conduit for oil and liquefied natural gas, it also plays a crucial role in the global aluminium trade. According to the International Aluminium Institute, the Gulf region accounted for more than 8 percent of global aluminium output last year. Over 5 million metric tons of metal produced in Bahrain, Qatar, Saudi Arabia and the United Arab Emirates are shipped annually through the strait to customers in Europe and the United States. The escalating war has now effectively shut that corridor. Reuters reported that the conflict has virtually shut the Strait of Hormuz for aluminium shipments, cutting off exports of the metal while also blocking imports of key raw materials needed to sustain production. The disruption is particularly severe because Gulf smelters depend heavily on imported bauxite and alumina, the raw materials used to produce aluminium. Ships carrying these materials have already begun diverting from their original routes. Vessel-tracking data cited by Reuters shows multiple bulk carriers that were heading toward the United Arab Emirates changing course toward Asia after the strait became impassable. The aluminium supply chain operates in tightly linked stages. Bauxite ore is refined into alumina, which is then smelted into aluminium used in industries ranging from transport and construction to packaging. The current shipping disruption threatens all three stages simultaneously. Reuters reported that three large vessels carrying bauxite, with a combined cargo of about 371,000 metric tons, have diverted away from the Gulf after approaching the region. Another vessel transporting Australian bauxite that was originally headed to the Gulf is now bound for China instead. Two ships carrying alumina destined for Bahrain also appear to be changing course. The disruption means that Gulf smelters cannot easily export finished aluminium while also struggling to import the raw materials needed to maintain production. ING analysts warned that this dual squeeze could quickly translate into supply losses if the conflict persists. “Extended disruption in the Strait would simultaneously choke alumina inflows and aluminium exports for Middle Eastern smelters,” ING said in a note on March 6, adding that such a scenario would “tighten global supply meaningfully.” On Tuesday, Qatari smelter Qatalum began to shut down. Shareholder Norsk Hydro issued a force majeure to customers. “The decision to shut down was made after the company’s gas supplier informed it of a forthcoming suspension of its gas supply,” Hydro, which holds 50% of the Qatalum joint venture, said in a statement. QatarEnergy, which owns 51% in the other Qatalum shareholder, Qatar Aluminum Manufacturing Co, had earlier said it was halting production of some downstream products, including aluminium, a day after suspending liquefied natural gas production due to Iranian drone attacks. Hydro said the shutdown of the 648,000 metric ton per year smelter was expected to be completed by the end of March and that a full restart could take six-to-12 months.
Why $100 Oil Isn’t Going to Spark a New Shale Boom
When oil hit $55 per barrel in late 2025, the drilling and completions side of the industry surrendered. A few months later, war breaks out in Iran, and WTI climbs past $100. That’s a marker at which meaningful drilling should occur. Yet, that’s not what I’m hearing. Rising oil prices are all over the press and inside politics, but they’re not in the conversations I’m having with E&Ps and the service side. On Day Nine of “Epic Fury,” I was talking with a chemical supplier (I am the owner of a frac company in Appalachia and an E&P in the Powder), and the war never came up. Nor did it with another operator I was talking to, nor with our frac-side operations manager, our drill-side ops manager, our CFO, controller, landman, or our office manager. No one—that I know—is carrying on much about the recent jump in prices, let alone cheering them on. Outside of thinking we’d better hedge, the response has mostly been a few words, a few shrugs, a “let’s take it while we can,” attitude. Our collective reaction would surprise outsiders, but it seems normal to me. A muted response seems rational, even grounded, after years of enduring the whipsaw of ups and downs. It’s also normal to assume that when the war comes to an end, we will be left with a supply and demand picture that may have changed somewhat due to oil installation attacks, but maybe not enough to be supportive of a renewed push to pick up rigs that were just laid down. Geopolitical risk is as common to drilling as is the risk of dry holes and mechanical failures. War premiums matter, for sure, but not enough to build a developmental program on. In April 2020, we got through the pandemic and an abysmal frac market, plus a storage crisis when WTI hit negative $37 per barrel. Two years later, in March 2022, oil hit a decade high of $130 when Russia invaded Ukraine. Over the next nine months, North America added 100 rigs until early 2023, when the count rolled over in a downhill trend that has yet to be broken. Maybe if oil were touching $120, there’d be more chatter. Or more importantly, if oil were to linger in the high $70’s for months on end, we’d see it, but with empty frac schedules and stacked rigs, it’s going to take something constructive, something along the lines of certainty. The quick bucks from war will dissipate, and everyone knows it. I wouldn’t be surprised either if the Trump Administration were to cap prices, like the old days of oil and airline ticket prices. So far, nothing has changed for us. There’s been no uptick in RFPs, nor are operators calling and asking for room on our frac schedule. It’s because even missile strikes aren’t shaking off the lethargy in oil right now. It gets like that on our service side when there’s little activity. You wait and see. You don’t burn calories. Maybe later, but not now. My view is that two catalysts need to occur before the phone really starts ringing. One is a change in the supply-demand balance, and the second is a prolonged war, with the inevitability being that they are one and the same. That is, the only thing right now that will change the supply-demand balance is a prolonged war. But that would take time, and my guess is there won’t be much mid-term voter stomach to see a bombing campaign carry on…and on. The extra dollars flowing in after nine days of war may just go to the completion of a few DUCs. Maybe, but the more likely outcome will be distributions to stakeholders rather than service companies. Capital providers likely aren’t going to free up allocations any time soon. The forward-looking price strip hasn’t adjusted much either. Like many others looking for something better, I attended NAPE this year, a kind of walking marketplace where money meets prospects. My E&P company didn’t set up a booth, but a lot of friends hocking deals did. What to me was glaringly obvious was the haves-and-haves-not undercurrent among the attendees. Prospect holders were the homely kids at a high school dance—relinquished to the dusty corners of the gym. The cool kids were the ones with the money, the PE firms with those big booths stuffed full of couches and padded chairs, alongside banks, packagers, brokers, and private capital providers. And then there were those talking about family office connections, the unicorns I’m constantly hearing about, but never seeing. I’m sure deals were being made, or will be made, based on introductions and planned meetings, but what I was hearing in terms of deal structure was the Golden Rule. He or she with the gold rules. If oil were sustained at $90, the script would flip, and prospect holders would be the ones with the couches, chairs, and coffee bars. But for now, they’re not. Even with escalating oil prices, the shorts will be waiting for the last missile to drop and will immediately cut the legs out from underneath us when it does. Unless durable supply comes off through damaged oil facilities or sabotage—like the Kuwaiti oil fires set by fleeing Iraqis in the 1991 Gulf War—the market will once again find its way to pricing the marginal barrel, last said to be in the $50’s. But hopefully not. That’s too low, too much of an accelerant for the oscillating sine curve of ups and downs. It’s nothing to build a company on. The same can be said of oil in the $90’s. It’s too high. For that reason, and the Golden Rule, E&Ps will remain cautious and service companies will suffer—until market forces eat away surplus barrels on demand, and not war.
Gulf Producers Slash Oil Output by 5 Million Bpd
The largest oil producers in the Middle East Gulf have deepened production cuts and are already lowering output by a combined more than 5 million barrels per day (bpd) as the de facto halt to tanker traffic in the Strait of Hormuz has started to affect upstream production. As storage fills and crude has no way out of the Gulf, the top Middle East producers and most influential OPEC members have had to resort to cutting actual oil production. Saudi Arabia has slashed its oil production by between 2 million bpd and 2.5 million bpd, anonymous sources familiar with the situation told Bloomberg on Tuesday. Reports emerged as early as Monday that Saudi oil giant Aramco had started reducing oil production at two fields as the disruption around the Strait of Hormuz starts to choke off crude exports from the Gulf. Saudi Arabia has some capacity to re-direct exports to the Red Sea to bypass the Strait of Hormuz using its east-west pipeline network. However, the pipeline volumes are a fraction of crude flows lost with Hormuz effectively closed. Iraq, OPEC’s second-largest producer behind Saudi Arabia, is also slashing output, by about 2.9 million bpd, according to Bloomberg’s sources. Production cuts in the United Arab Emirates (UAE) currently amount to 500,000 bpd-800,000 bpd, while Kuwait has slashed output by about 500,000 bpd, said the sources who declined to be identified due to the fact they are discussing confidential data. At Aramco’s Q4 earnings call on Tuesday, CEO Amin Nasser declined to discuss Saudi production levels, although the executive warned of “catastrophic consequences” for the oil market and global economy if the halt to Strait of Hormuz traffic continues. U.S. President Donald Trump on Monday sought to reassure markets and claimed the war will end soon, but Iran on Tuesday vowed not to let “a litre” of oil to be exported from the Middle East until the United States and Israel stop bombing it. “Trump’s words will only go so far. Ultimately, the market will need to see a resumption of oil flows through the Strait of Hormuz to sustain a move lower in oil prices,” ING’s commodities strategists Warren Patterson and Ewa Manthey said in a Tuesday note. “Failing that, we are unlikely to have seen the highs yet.”
China Boosted Oil Imports Nearly 16% in Early 2026
Crude oil imports into China climbed 15.8% over the first two months of the year, with the information likely to continue to a reversal of the recent decline in oil prices, signalling strong demand from the world’s largest importer. Per official data from Beijing, China imported crude oil at a daily rate of 11.99 million barrels, Reuters reported today, or a total of 96.93 million tons. This is higher than the 2025 average, which was a record-high 11.55 million barrels daily. Seaborne imports specifically rose by 2.1 million barrels daily from a year ago in January, and by 1.7 million barrels daily in February. Also, February seaborne imports, at 11.47 million barrels daily, were higher than January rates, which averaged 10.88 million barrels daily, according to data from Kpler. The increase in imports was prompted by higher refining rates but also by continued stockpiling. It was this stockpiling, which has been going on steadily for over a year, at rates close to 1 million barrels daily, that has put China in a more favorable position than other large oil importers now that traffic via the Strait of Hormuz has been severely disrupted. “The increase in Russian shipments in January and February was particularly notable, nearly doubling from a year ago,” Muyu Xu, oil analyst at Kpler, said as quoted by Reuters. “This was mainly because India reduced its purchases, leaving more cargoes available to China at lower prices.” This has changed this month, as the United States lifted some sanctions on Russian crude to be directed to Indian buyers amid the supply crunch caused by the U.S.-Israel war with Iran. The Treasury Department’s Office of Foreign Assets Control issued a general license last week for Indian refiners to buy Russian crude oil from March 5 to April 4.
GAIL seeks LNG cargo for March delivery, say industry sources
India’s largest gas distributor, GAIL, has issued a tender seeking a cargo of liquefied natural gas (LNG) for delivery in March, as the conflict in the Middle East curtailed shipping and halted Qatari output. GAIL is seeking the cargo for delivery on March 15-25 in a tender that closes March 9, two industry sources said on Monday.
U.S. urged India to buy Russian oil already at sea to ease supply fears: Energy Secretary Chris Wright
The U.S. has urged India to buy Russian oil already floating at sea and redirect it to Indian refineries to “tamp down” fears of supply shortages and price spikes amid the ongoing West Asia conflict, Energy Secretary Chris Wright has said. In an interview to CNN on Sunday (March 8, 2026), Mr. Wright said he, along with Treasury Secretary Scott Bessent, had spoken to Indian authorities about buying Russian crude cargoes currently waiting to be unloaded at Chinese refineries. India has been a great partner through this. I did call up the Indians, as did Treasury Secretary (Scott) Bessent, and said there’s a whole bunch of oil floating waiting to unload at Chinese refineries. “Instead of having it wait six weeks to unload there, let’s just pull that oil forward, have it land in Indian refineries and tamp this fear of shortage of oil, tamp the price spikes and the concerns we see in the marketplace,” he said. However, the U.S. policy towards Russia has not changed at all, Mr. Wright said, adding that “India is very clear on that”.
India says oil price surge unlikely to stoke inflation sharply
India does not expect inflation to rise substantially from a jump in global crude oil prices triggered by the war in the Middle East, as domestic price levels remain near the lower end of the central bank’s tolerance band, Finance Minister Nirmala Sitharaman said on Monday. Oil prices surged about 26% in early trade to their highest since July 2022 after Iran named Mojtaba Khamenei as successor to his father Supreme Leader Ayatollah Ali Khamenei, who was killed in air strikes by Israel and the United States more than a week ago. Major Middle Eastern oil producers have cut supply because they cannot safely send shipments through the Strait of Hormuz to refiners worldwide.
G7 Nations Delay Strategic Oil Reserve Release Decision
Finance ministers from the Group of Seven (G7) countries reached a broad agreement on Monday to hold off the release of oil from their respective strategic reserves, for now. The ministers held a teleconference on Monday after oil prices spiked to levels last seen during the global energy crisis triggered by Russia’s invasion of Ukraine in 2022. The G7 is an informal, intergovernmental economic and political forum comprising seven of the world’s most advanced industrialized economies including Canada, France, Germany, Italy, Japan, the United Kingdom and the United States. “There was broad consensus on this,” one G7 official told Reuters. “It was not that someone was against it, it’s just about timing. More analysis is needed,” the official said, adding that the final decision will be made by the leaders. Oil prices retreated in Monday’s mid-day session amid reports that G7 leaders were considering releasing up to 400 million barrels of crude from their strategic reserves. That volume is considerably higher than the 240 million barrels that the Biden administration released from the United States’s Strategic Petroleum Reserve during the previous global energy crisis. Brent crude for April delivery pulled back from a multi-year high of $116.23 per barrel in the early hours of Monday morning to trade at $99.63 per barrel at 12.30 pm ET while WTI crude for April delivery fell from $115.29 per barrel to $95.81. The big release could impact oil balances in global markets negatively, with the experts still reporting surpluses. The IEA’s Fatih Birol announced on Friday that there are no plans for emergency releases of oil from joint stocks because,“There is plenty of oil, we have no oil shortage,” Birol said after meeting European Commission president Ursula von der Leyen “There is a huge surplus in the market,” he added. Last week, JPMorgan Chase warned that Brent crude oil prices could spike to $120 per barrel if a full-scale conflict in the Middle East leads to a sustained disruption of oil flows through the Strait of Hormuz, with Gulf producers only able to sustain normal production for roughly 25days if the Strait is completely blocked.
Oil Prices Tumble After Trump Signals Iran War Could End Soon
Oil prices tumbled in early Asian trade on Tuesday after surging to their highest levels since 2022 a day earlier. The drop was driven by comments from Trump that suggested the war with Iran may soon end, easing concerns about prolonged disruptions to global crude supplies. At the time of writing, Brent crude was trading at $89.31 per barrel, down 9.75%, while West Texas Intermediate had fallen to $85.90, down 9.36% on the session. In a CBS News interview, Trump said the war was “very complete, pretty much” and that the United States was “very far ahead” of his earlier estimate of a four- to five-week timeline for the campaign. Trump later told reporters that the war would end “very soon,” though he indicated it would not conclude within the coming week. Those remarks triggered a sell-off in energy markets as traders reassessed the risk of sustained supply disruptions in the Middle East. Oil had surged well above $100 per barrel on Monday, falling just short of $120 as conflict across the Middle East escalated and Tehran announced Ayatollah Mojtaba Khamenei as its new supreme leader. Adding to the downward pressure, Russian President Vladimir Putin held a call with Trump and presented proposals aimed at quickly ending the conflict, according to a Kremlin aide. Separately, G7 finance ministers said the group “stands ready” to take action if necessary to stabilize oil markets, though they stopped short of announcing a coordinated release of strategic petroleum reserves. Despite the sharp pullback, crude markets are likely to remain volatile as plenty of geopolitical risk remains, chiefly the fact that it is unclear how Iran will react if there were a cessation of attacks from the U.S. “Taking the events of the past 24 hours into account, I expect crude oil to remain highly volatile, trading within a wide range between $75ish and $105ish in the sessions ahead,” IG market analyst Tony Sycamore said in a note reported by Reuters. Meanwhile, disruptions in Gulf production continue to weigh on the outlook. Iraq has cut output at its main southern oilfields by 70% to about 1.3 million barrels per day, while Kuwait Petroleum Corporation has begun reducing production and declared force majeure. Saudi Arabia has also started trimming output. Iran signaled it could escalate further if attacks continue. The Islamic Revolutionary Guard Corps said Tehran would “determine the end of the war” and warned that Iran would not allow “one litre of oil” to be exported from the region if U.S. and Israeli strikes persisted. Lower oil prices provided relief for broader financial markets. Chinese assets rallied in early Tuesday trading as energy costs fell. China sourced roughly 13% of its oil imports from Iran before the conflict, making oil price swings particularly consequential for the country’s markets. For now, traders are going to have to wait and see whether geopolitical tensions escalate again or whether diplomatic efforts gain traction.