IEA says Hormuz reopening remains elusive as aluminium supply tightens

The ongoing closure of the Strait of Hormuz, triggered by the U.S.-Israel air war against Iran that began in late February 2026, has sent shockwaves through global aluminium markets. With the Gulf region accounting for more than 8% of world primary aluminium output, shipping disruptions and direct strikes on production facilities have tightened supply and driven prices to multi-year highs, with analysts warning that further escalation could push LME aluminium above $4,000 per tonne.

Production Crippled Across the Gulf

The International Energy Agency, in its Global Critical Minerals Outlook 2026, directly linked disruptions around the Strait of Hormuz to declining aluminium supply and rising prices. The IEA reported that Aluminium Bahrain was operating at roughly 30% capacity by April 2026 after declaring force majeure and shutting down three production lines. Qatar's Qatalum was running at about 60% capacity due to disrupted gas supplies, while Emirates Global Aluminium's Al Taweelah plant suspended operations after energy infrastructure was damaged in strikes at the end of March.trend+1

Reuters reported in March that Iranian attacks on Alba and Emirates Global intensified fears of severe global shortages. Gulf aluminium output fell 15% year-over-year in the January-April period, dropping to 1.7 million tonnes. According to shipping data firm AXSMarine, global seaborne alumina trade declined nearly 4% in the second quarter of 2026 as key Gulf ports became inaccessible.axsmarine+2

Prices Surge, Analysts Eye $4,000

LME aluminium prices peaked at $3,855 per tonne on June 2, 2026, up from around $3,400 in early March. By April, prices had climbed to nearly $3,700 per tonne — the highest level in four years — while the Rotterdam premium jumped roughly 60% between February and April. In mid-August, prices have eased somewhat but remain elevated above $3,200.westmetall+3

At the CRU World Aluminium Summit in May, Paul Williams, head of CRU's Aluminium Value Chain, warned that prices could rise above $4,000 per tonne over the next 12 to 18 months. Forbes reported potential production losses of 1.1 to 1.8 million tonnes for 2026.alcircle+1

Broader Supply Chain Under Strain

The IEA's latest monthly report, released August 12, noted that renewed hostilities have reversed a nascent recovery in Gulf output, with the Hormuz reopening remaining "elusive". The crisis extends beyond aluminium: base metal prices rose by one-third between January 2025 and April 2026 amid tight supply conditions.reuters+1

More than five million metric tonnes of aluminium move through the Strait of Hormuz annually, according to analysis from West Point's Modern War Institute. With LME registered stocks falling to their lowest levels since mid-2025 and no diplomatic resolution in sight, the aluminium market remains caught between constrained Gulf supply and growing global demand.mwi.westpoint+1