Aluminum prices climbed to a fresh four-year high on Monday as the collapse of US-Iran talks and Washington’s move to blockade Iranian ports pushed Middle East supply fears back to the front of the market. The new rally in aluminum futures shows that traders are still pricing geopolitical risk into metal supply chains, especially with Gulf smelters, shipping routes and energy costs all under renewed pressure.
Aluminum leads the move as oil jumps and supply fears deepen
Three-month LME aluminum rose to about $3,571/t in Monday trading, its highest level since March 2022, after failed talks in Islamabad were followed by a US announcement that vessels entering or leaving Iranian ports would face a blockade. US Central Command said non-Iranian port traffic through Hormuz would not be impeded, but the market still reacted because the distinction does little to remove freight, insurance and operational risk across the Gulf supply chain.
That matters because the Middle East accounts for roughly 9% of global primary aluminum production, and the region depends heavily on the Strait of Hormuz for both exports and raw material inflows. Reuters has already described the Iran war as exposing the fragility of Western aluminum supply, while traders have rushed to secure LME units as shortages loom. Earlier this month, nearly 100,000 tonnes of warranted aluminum were cancelled in Port Klang, and cancelled warrants surged to around 40% of LME aluminum inventories as physical consumers repositioned metal toward Europe and the US.
The energy backdrop amplified the move. Brent and WTI both returned to around or above $100/bl after the blockade announcement, and the Strait of Hormuz still handles about a fifth of global oil and gas flows. European Commission President Ursula von der Leyen said the EU’s fossil fuel import bill has already risen by more than €22bn since the conflict began, reinforcing the inflationary and cost-push pressure now feeding into metals.
Broader base metals stay supported, but demand signals remain mixed
Copper also stayed firm as the market balanced geopolitical risk with tight supply themes. The broader copper market has already been pushed higher this year by scarcity fears, while China’s domestic smelters have kept running despite severe pressure on treatment and refining charges. Reuters reported that major Chinese copper producers are still planning to raise or maintain output in 2026, with Jiangxi Copper guiding around 2.39mn t and Daye Nonferrous about 713,000t, helped in part by strong sulphuric acid by-product economics.
But demand signals are not uniformly bullish. Japan, a key aluminum buyer, recently agreed its highest quarterly import premium in 11 years because Middle East disruption tightened regional supply. At the same time, Japan’s February primary aluminum imports fell and downstream shipments of extruded products, flat-rolled products and foil weakened, suggesting that high prices are colliding with softer manufacturing appetite in parts of Asia.
That leaves the market with a familiar but powerful setup. Supply risk is driving price formation faster than end-use demand is weakening it. For aluminum in particular, that makes the Gulf conflict more important than short-term macro noise, because any renewed interruption to smelter output, shipping or insurance availability could tighten the Western market again very quickly.
SuperMetalPrice Commentary
This aluminum rally is not just an oil story spilling into metals. It reflects a more structural problem: the West remains highly exposed to Gulf aluminum while exchange inventories and deliverable units are already under pressure.
The next thing to watch is whether this remains a freight-and-risk premium event or turns into a deeper physical shortage. If Gulf supply disruptions persist, aluminum could stay elevated even if wider financial markets remain relatively calm.
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