How the Strait of Hormuz Closure Reshaped Global Aluminium Markets in 2026

The Strait of Hormuz closure, following the U.S.-Israel air war against Iran that began in late February 2026, has triggered one of the most severe supply shocks in the history of the global aluminium market. Roughly 2 million tonnes of supply have been removed from the chain, Gulf production has cratered, and LME prices hit a four-year high before partially retreating as markets priced in a fragile stalemate .

Production Disruptions at Gulf Smelters

The three largest Gulf smelters were hit directly by the conflict and supply chain blockage:

Aluminium Bahrain (Alba) declared force majeure on March 4, 2026, and by March 15 had initiated a controlled shutdown of three smelting lines (19% of its 1.62-million-tonne capacity) . By April 2026, the smelter — the world's largest outside China — was operating at roughly 30% of capacity .

Qatalum (Qatar) initially faced a full shutdown risk after a drone attack on the Ras Laffan LNG terminal cut gas supply. After QatarEnergy confirmed reduced gas flows, Qatalum stabilized at approximately 60% of nameplate capacity (roughly 390,000 tonnes annually) .

Emirates Global Aluminium — Al Taweelah was shut by an Iranian strike in March. As of August 12, 2026, EGA reported the plant was operating at just 18% of capacity and does not expect a full return to prior output levels until early 2027 . EGA is spending $400 million to restore production . Its alumina refinery output nearly halved to 602,000 tonnes in H1 2026 .

Overall Gulf aluminium production fell to its lowest level in over a decade in April 2026 . Damage and logistics constraints removed a net ~2 million tonnes of annualized supply from the global chain .

Global Seaborne Alumina Trade

Middle Eastern smelters rely heavily on imported alumina and bauxite. Vessels carrying these raw materials began diverting away from Hormuz as early as March 9, 2026 . Wood Mackenzie estimated the Strait's closure could cut off up to 60% of alumina supply to Middle Eastern smelters, potentially removing 3–3.5 million tonnes of output in 2026 . Global seaborne bulk alumina trade declined by nearly 4% to 10.4 million tonnes in Q2 2026, primarily due to the Hormuz closure disrupting access for key importing nations .

LME Aluminium Price Movements

Prices surged from roughly $3,400/tonne in early March to a four-year high of $3,855/tonne on June 2, 2026 (S&P Global confirms the year-to-date peak at $3,854/mt) . A brief U.S.-Iran deal in mid-June caused a sharp pullback — LME spot aluminium fell to $3,418/mt on June 15 and three-month to $3,380/mt . By late July, the war premium had largely unwound, with LME three-month aluminium trading around $3,170/tonne — roughly where it was before the conflict escalated . However, as stalled Hormuz talks dragged on, prices crept back up to ~$3,337/tonne by August 11, 2026, up more than 8% since end of June .

Broader Supply Chain and Base Metals Strain

The Strait of Hormuz normally carries roughly 5.14 million tonnes of primary aluminium annually — about 75% of the region's total production and roughly 9% of global supply . Norsk Hydro warned in late July that the global aluminium market faces deepening deficits if Hormuz constraints persist, as inbound raw material shipments continue to be inhibited . U.S. aluminium buyers faced even steeper prices, with domestic premiums pushing above $6,000/tonne due to additional Section 232 tariffs compounding the supply crunch . The UN reported that the Hormuz disruption caused a 95% drop in natural gas exports and severe knock-on effects for fertilizers and industrial products beyond aluminium .

Diplomatic Outlook

Per the IEA's most recent assessment as of August 12, 2026, the reopening of the Strait of Hormuz remains elusive with no diplomatic resolution in sight . Stalled U.S.-Iran negotiations have raised fears of a prolonged supply disruption, keeping the market on edge and underpinning the recent price rebound above $3,300/tonne .