Attacks on steel, aluminium infrastructure lift supply risks as oil surges to $115

• Strikes hit key steel and aluminium assets, raising risks to 16 mnt steel capacity
• Demand destruction signals emerge as bunker fuel demand weakens

How will the ongoing conflict in the Middle East affect global metals markets? As the US-Israel and Iran war escalates, BigMint presents a sharp update on the implications for steel, aluminium and energy supply chains:

Attacks on industrial and energy infrastructure across the Middle East are beginning to disrupt metals supply chains, with confirmed damage to major steel and aluminium facilities, according to media reports and previous BigMint analysis.

Air strikes have hit two of Iran’s largest steelmakers, damaging power infrastructure, storage and key production units, leading to partial shutdowns of operations. At the same time, Iranian authorities have warned of retaliatory strikes targeting steel facilities across the Gulf, including plants in Saudi Arabia, the UAE, Qatar, Bahrain, Kuwait and Israel.

According to previous BigMint analysis, six major steel facilities across these regions together account for around 16 mnt of annual crude steel capacity, highlighting the scale of potential disruption if attacks escalate further.

Aluminium supply chains are also facing direct disruption. Emirates Global Aluminium’s Al Taweelah smelter in Abu Dhabi, which produced around 1.6 mnt of metal in 2025, has sustained significant damage following a missile and drone attack, with operations and logistics affected, according to media reports.

These developments are feeding directly into energy markets. Brent crude has surged to around $115/bbl as supply risks intensify alongside continued disruption to shipping routes and export infrastructure.

For nearly four weeks, oil markets absorbed the loss of an estimated 17.8 million bpd of flows through the Strait of Hormuz due to strong pre-existing supply buffers. That buffer has now largely eroded, leaving the market significantly more sensitive to additional disruptions, according to media reports.

At the same time, the impact is no longer limited to supply. Early signs of demand destruction are beginning to emerge. Higher fuel costs are beginning to weigh on industrial activity and trade flows, particularly across energy-intensive sectors such as steel and aluminium, compressing margins and prompting more cautious procurement.

Shipping markets are beginning to reflect this shift. Prices of very low sulphur fuel oil in Singapore have declined sharply to around $834 per tonne on 27 March from $1,120 per tonne on 13 March, indicating weaker bunker demand as fixture activity slows despite elevated crude prices.

The impact on steel markets is being felt through both cost and trade channels. Higher freight rates, war-risk premiums and vessel rerouting are increasing delivered costs into export markets, while subdued demand is limiting mills’ ability to pass these on. Disruptions along the Red Sea Suez Canal corridor and the Strait of Hormuz are extending transit times and tightening vessel availability, further weighing on export activity, according to media reports.

Aluminium markets face a more direct supply-side risk. The Middle East accounts for roughly 9% of global aluminium output, and disruptions to smelting operations and feedstock flows could tighten availability if outages persist. At the same time, weakening downstream demand is beginning to offset supply-side support, creating a more volatile pricing environment.

The emerging dynamic reflects a shift in market structure. Supply disruptions continue to support prices, but rising energy costs and logistical uncertainty are beginning to curb demand across commodities.

If current conditions persist, the interaction between constrained supply, disrupted logistics and emerging demand destruction could define the next phase of steel and aluminium markets, with volatility likely to remain elevated in the near term.