Aluminum Prices Surge as Middle East Conflict Disrupts Global Supply Chain

Financial giant Citi has increased its aluminum price forecast to $3,600 per metric ton due to supply disruptions caused by conflict in Iran. Major producers in the Gulf region have declared force majeure, halting shipments through critical shipping routes.

Investment bank Citi has boosted its short-term aluminum price projection to $3,600 per metric ton, an increase from the previous $3,400 forecast, as ongoing conflict in Iran creates significant supply chain disruptions across the region.

The financial institution indicated that aluminum could potentially reach $4,000 per metric ton under optimal market conditions, driven by shipping interruptions and emergency declarations from major producers.

“Force majeure has now materialised at two Gulf producers, marking a clear shift from risk to realised disruption,” Citi said.

Aluminum prices on the London Metal Exchange reached their highest point in nearly four years Wednesday following Aluminium Bahrain’s decision to halt shipments, intensifying concerns about how Middle Eastern tensions are affecting supplies of the metal commonly used in construction, transportation and packaging industries.

The company, which runs the largest aluminum production facility outside China, announced force majeure Wednesday, informing clients about potential shipping delays due to inability to transport materials through the Strait of Hormuz.

Maritime traffic through the strategic waterway connecting Iran and Oman has virtually stopped after vessels faced Iranian retaliatory attacks targeting U.S. and Israeli interests. This shipping route typically handles approximately 20% of global oil consumption.

According to Citi analysts, the conflict’s impact may persist due to ongoing shipping and insurance complications, with container-transported raw materials and processed products expected to recover more gradually than oil tanker operations, even if limited passage resumes.

The bank also highlighted potential risks of production facility instability, which could postpone operational restarts by several months.

Goldman Sachs projected Monday that aluminum prices might reach $3,600 per ton if regional production remains offline for one month.