Market Brief | 13 March 2026

On March 12th, the new Supreme Leader of Iran, Mojtaba Khamenei stated that the Strait of Hormuz, one of the most strategically important energy chokepoints in the global economy, will remain closed.   

The Strait of Hormuz is a narrow maritime passage between Iran and Oman that connects the Persian Gulf to the Gulf of Oman and the Arabian Sea.

Several major oil-exporting countries rely on the route for global exports, including:

• Saudi Arabia
• Iraq
• Kuwait
• United Arab Emirates (UAE)
• Qatar

Because of this concentration of energy trade, disruptions to Hormuz have a disproportionate impact on global markets:

• Approximately 20 million barrels of oil per day transit the strait (this represents ~20% of global petroleum consumption and around 25% of all seaborne oil trade)
• The route is also a critical corridor for LNG shipments from Qatar and the UAE, which together account for ~20% of global LNG trade.

Oil prices have risen by 36% since the war began on February 28th. The International Energy Agency has authorized a 400 million-barrel emergency stock release, the largest in history.

This follows historic precedents. In 1979-80, during the Iranian Revolution and Iran-Iraq War, oil prices more than doubled in 12 months, despite only a ~4% reduction in global supply. Similarly, during the 1990 Gulf War, oil prices increased from US$17 per barrel in July 1990 to US$36 per barrel by October.

The continued closure of the Strait of Hormuz and resulting volatility in oil prices are having mixed impacts on metal markets. While risks of more extensive supply disruptions are rising, metal prices are simultaneously coming under pressure from “stagflation trading”, driven by rising market expectations of interest rate hikes to control inflation.

Short-term supply-side impacts

• Several aluminium smelting facilities in the Middle East have been suspended due to power and energy outages, with others at risk. The Middle East accounts for approximately 9% of global primary aluminum capacity
• Higher energy and transport costs increase mining and refining production costs, especially for aluminium and zinc smelters. Over 13,000 kWh and 3,500 kWh of electricity are required per tonne of aluminium and zinc, respectively
• Gulf countries supply ~45% of global sulphur, a key input used in copper and nickel hydrometallurgical processing
• Precious metals typically serve as a hedge during periods of heightened geopolitical risk and rising inflation expectations, but their gains tend to narrow or even turn into losses once the risk materializes, as policy expectations and market liquidity conditions come into play

Fig 1 | Commodities prices since the beginning of 2026

The current disruption caused by the Strait of Hormuz closure impacts both aggregate supply and aggregate demand simultaneously. The high inflation risk stemming from elevated oil prices has heightened market expectations of Fed rate hikes. Under this “stagflation trade” dynamic, both base and precious metals face downward pressure.

These dynamics are reflected in price performance since the conflict began on February 28th: copper, gold, nickel, and zinc have registered declines of 2-4%, while aluminium prices have increased by 11%.

However, the medium-and long-term impact of the disruption on demand is not yet reflected in price performance. If sustained, disruptions in the Strait of Hormuz could accelerate policy momentum toward electrification and renewable energy deployment, reinforcing structural demand growth for critical minerals such as copper, lithium, and nickel.

Long-term structural shifts

• Energy security concerns from oil volatility are reinforcing diversification away from fossil fuels, as countries seek to reduce exposure to geopolitical supply disruptions
  • Renewable energy systems require 3-6x more minerals per megawatt than conventional power plants
• Minerals are becoming central inputs in energy infrastructure.  Electrified systems require large volumes of copper, lithium, and other metals.
  • Global installed electricity generation capacity is expected to expand from ~8,000 GW today to approximately 20,000 GW in the next 20 years to meet expected demand⁶
• Strategic competition for mineral supply chains is intensifying, as governments prioritize access to critical minerals required for the global energy transition

The disruption of energy flows through the Strait of Hormuz highlights the strategic vulnerability of fossil fuel supply chains and reinforces a longer-term shift in global commodity demand toward critical minerals. As governments and industries seek to reduce exposure to oil market volatility and geopolitical chokepoints, electrification of transport systems, expansion of renewable power generation, and investment in energy storage are expected to accelerate.