Emirates Global Aluminium declared force majeure on select contracts after severe damage at its facility, exacerbating supply fears. Aluminum prices soared to $3,571 per metric ton on the London Metal Exchange, a four-year peak driven by escalating Middle East tensions. U.S.-Iran peace talks collapsed, prompting President Trump’s threat to blockade the Strait of Hormuz, a critical chokepoint for 20% of U.S. aluminum imports. The blockade, set to begin at 10 a.m. Eastern Time, risks disrupting 9% of global output, with analysts warning of prolonged supply chain strain.

Market volatility intensified as traders priced in potential shortages. The $91.5/ton premium for immediate-delivery aluminum over three-month contracts marked a dramatic reversal from earlier discounts, signaling acute near-term scarcity. Energy cost surges further pressured smelters, compounding production risks. Key Gulf producers—Saudi Arabia, UAE, and Bahrain—face export hurdles, deepening regional uncertainty.

The Hormuz Strait’s strategic role in global trade underscores the geopolitical stakes. With inventories already lean, any shipping disruption could amplify price pressures, particularly for U.S. manufacturers reliant on Gulf imports. While Central Command clarified forces won’t block non-Iranian vessels, the mere threat has triggered market jitters.

Experts caution that sustained Hormuz instability would tighten regional supply, disproportionately affecting energy-intensive industries. Investors are closely monitoring U.S.-Iran negotiations and Middle East shipping routes for developments that could either stabilize or exacerbate aluminum’s price volatility. Supply chain resilience remains a pressing concern amid converging economic and geopolitical shocks.