Market Brief | Updated for 27 March 2026

On March 12th, Iran’s Supreme Leader, Mojtaba Khamenei, announced the closure of the Strait of Hormuz, one of the most critical energy chokepoints in the global economy. While direct impacts on mining operations remain limited to date, the disruption is already triggering systemic second-order effects across energy, petrochemical, and agricultural markets.

These disruptions are feeding into a broader inflationary environment, which in turn is increasing input costs and logistics costs across the mining sector. The result is likely to be a tightening of global commodity markets and a structural upward repricing of medium-term cost curves for critical minerals, despite near-term volatility driven by macro conditions.

Transmission mechanism of the disruption:

1. Energy shock: disruption to oil, gas, and refining flows
2. Industrial inputs shock: shortages in sulfur, petrochemicals, and fertilizers
3. Inflation channel: rising food and energy prices with lagged persistence
4. Cost curve shift: higher operating and capital costs across mining
5. Supply response: delayed investment and constrained output
6. Geopolitical response: Governments accelerate shift toward electrification and diversified energy systems

Strategic importance of Hormuz

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
• 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 ¹
  • This represents ~20% of global petroleum consumption and ~25% of all seaborne oil trade ²
• 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 had risen by 40% as of March 27th from US$67/barrel prior to the outbreak of war on February 28th, having briefly touched an intraday high of $119 on March 9th. 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.

To date, the logistics disruptions in the Middle East have had limited direct impact on Appian’s operating assets. Nevertheless, due to the globally interconnected nature of commodity markets, the closure of the Strait of Hormuz is already reshaping supply chains. The disruption is generating ripple effects across industrial inputs, energy markets, and downstream manufacturing.

Immediate supply-side disruptions

Oil remains the backbone of industrial activity, and prolonged volatility has far‑reaching effects. However, diesel fuel typically represents only a relatively small portion of a mine’s total operating costs, generally around 3-10% of total operating expenditure. Sulphur, produced as a byproduct of natural gas processing and oil refining, has already seen supply interruptions.

• Gulf countries supply ~45% of global sulphur, a key input used in copper and nickel hydrometallurgical processing

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.

• 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

Petrochemical supply chains have also been directly affected. The closure has disrupted flows of naphtha, MEG, and urea, critical feedstocks for plastics, fertilizers, and textiles. With one‑third of global seaborne fertilizer trade passing through the Strait, plant shutdowns are already occurring. Persistent shortages risk tightening fertilizer markets into next year, raising food prices globally. This in turn reinforces a more persistent global inflation environment, increasing mining production costs and supporting a structural upward repricing of medium-term commodity prices.

Resource‑rich nations’ policy shifts to prioritize domestic supply are further tightening global supply:

• China has suspended refined fuel exports for March
• South Korea is evaluating naphtha export restrictions
• The Philippines has declared a national energy emergency
• India has implemented emergency natural gas and LPG distribution controls prioritizing households and transport
• Indonesia is considering higher export taxes on coal and nickel to capture scarcity premiums

The ongoing disruption impacts both aggregate supply and aggregate demand simultaneously. High inflation risks are increasing expectations of Fed rate hikes.  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. This is having more influence on the price of commodities in the short-term.

Fig 1 | Commodities prices since the beginning of 2026

Base and precious metals face downward pressure: gold, copper, zinc, and nickel prices have respectively fallen 16%, 10%, 8% and 4%, while aluminium prices have risen 6% since the war
broke out.

Long-term structural shifts

In the medium and long term, the volatility at the Strait of Hormuz is reinforcing a structural pivot toward electrification and diversified energy systems.

Energy security concerns are pushing governments to reassess strategic resilience. Australia, despite being resource‑rich,  has grown dependent on refined fuel imports. Recent fears that Tropical Cyclone Narelle and diesel shortages could disrupt mining and shipping in Western Australia have renewed national debate over fuel security, stockpiles, and the transition toward electrification.

Renewable energy systems require 3-6x more minerals per megawatt than conventional power plants. Global electricity capacity is expected to increase from ~8,000 GW today to ~20,000 GW within 20 years. Strategic competition for mineral supply chains is intensifying as governments prioritize critical minerals essential to the energy transition.

As nations seek to reduce geopolitical exposure to energy chokepoints, demand for critical minerals, particularly copper, lithium, and nickel, is expected to accelerate.

The disruption underscores the vulnerability of fossil‑fuel supply chains and strengthens the strategic case for investment in electrified transport, renewable power, and energy storage systems. Combined with rising policy momentum, these shifts could reshape long‑term commodity demand and global investment patterns across the natural resources sector.

While the immediate market response is being driven by macroeconomic uncertainty, the closure of the Strait of Hormuz is catalyzing deeper structural changes across energy, industrial inputs,
and global trade flows.  As a result, the current disruption is likely to mark the early stages of a structural repricing of critical minerals, driven by less immediate supply, higher costs, and geopolitical agendas.