Negotiations between the U.S. and Iran continue to stall. Although the fragile ceasefire has largely held, the U.S. has threatened multiple times to resume attacks on Iran after the latter declined to discuss nuclear-related issues.
Additionally, Iranian drone strikes on Saudi Arabia, and the United Arab Emirates were allegedly carried out on May 17 and 18, further threatening peace in the region.
It is unknown when further U.S. and Israeli strikes could resume if the ceasefire falls through for good. Iran submitted an additional peace proposal to the U.S. on the morning of May 18, but the details have not been publicly disclosed, and the U.S. has so far proven highly unreceptive to several previous Iranian proposals.
With talks making little progress, the Strait of Hormuz has remained closed for most shipping traffic. In an effort to restart shipping through the crucial waterway, U.S. President Trump announced that the U.S. would begin guiding commercial vessels out of the strait from May 4. According to the U.S. Central Command, guided-missile destroyers, aircraft and drones would be used to support the initiative but navy escorts were not expected to be involved.
In response to the plan, authorities in Iran warned that any U.S. involvement affecting shipping traffic in the Strait of Hormuz would be considered a breach of the ceasefire. Within 24 hours of its start, President Trump announced that the initiative would be paused to allow negotiations with Iran to continue. The U.S. naval blockade, however, will remain in place indefinitely. According to a statement by the U.S. Central Command on May 10, at least 61 commercial ships were turned away from Iranian ports since the blockade began. Hundreds of cargo ships, bulk carriers and tankers reportedly remain trapped on both sides of the strait due to the conflict.
Global energy market faces shortages and rising prices as Strait of Hormuz remains closed
At the beginning of May, representatives of ExxonMobil Corporation, Chevron Corporation, and ConocoPhillips Company, three of the United States’ biggest oil companies, warned that the price of crude oil could jump even higher soon as countries use up available supply from commercial stockpiles, strategic reserves and shipments that were still stored in tankers before the war in the Middle East broke out. Oil prices have already increased by more than 50% since the conflict started two months ago but haven’t reached previous record levels yet. In recent weeks, representatives of United Kingdom-based Shell plc, one of Europe’s biggest oil and gas companies, and Saudi Arabian Oil Company, the world’s biggest oil and gas company, warned that disruptions to oil and liquefied natural gas supply could last into 2027.
In another notable development for global energy markets, the United Arab Emirates announced that it will leave the Organization of the Petroleum Exporting Countries (OPEC) with effect from May 1. The country’s exit follows years of growing competition with Saudi Arabia for regional influence and persistent tensions over OPEC’s oil output policy. The United Arab Emirates were the group’s third largest crude oil producer, accounting for around 12% of total output. While the United Arab Emirates would be able to increase production following its exit from the group due to available spare capacity, this is not expected to alleviate supply shortages in the market in the short-term as shipping through the Strait of Hormuz remains severely curtailed.
Material shortages to worsen as Strait of Hormuz remains closed
Aluminum Supply
In 2025, countries in the Middle East produced around 6.16 million metric tons of aluminum, roughly 9% of the world’s total aluminum supply. Some of the world’s largest aluminum smelters are based in the region, including Emirates Global Aluminium (EGA) in the United Arab Emirates, Sohar Aluminium Company in Oman, Aluminium Bahrain B.S.C., Qatar Aluminium Limited (Qatalum), and Saudi Arabian Mining Company (Ma’aden).
Following attacks on facilities operated by Aluminium Bahrain B.S.C. and EGA before the ceasefire went into effect, aluminum supply from the region could take until 2027 to return to pre-conflict levels, even if shipping through the Strait of Hormuz resumes soon.
Aluminum is widely used in industries such as the construction, packaging, renewable energy, and transport sectors. According to some estimates, the global economy could face a shortage of 2 million tons of aluminum until the end of the year due to the conflict, with an even bigger shortage possible if trade flows through the strait remain at current levels.
If supply disruptions worsen, manufacturers in Europe and the U.S. could be particularly exposed to business impacts due to low stockpiles and a notable reliance on imports from the Middle East. Prior to the conflict, the U.S. and Europe imported around 22% and 18.5% of their primary and alloyed aluminum supply from the region. However, while around half of all aluminum used in the U.S. is imported, the majority of U.S. aluminum imports come from Canada, which could shield some U.S. companies from the worst impact of supply disruptions in the Middle East.
Several countries in Southeast and East Asia are also expected to be at an elevated risk of supply shortages, including Japan and South Korea, two of Asia’s biggest economies. In Japan, prices for aluminum have reportedly spiked by around 20% since the beginning of the war.
Meanwhile, aluminum manufacturers in China, the world’s biggest aluminum producer, have reportedly seen an uptick in demand from overseas following the Middle East crisis, particularly for products intended for the energy and automotive industries. Compared to February, aluminum exports from China increased by 13% in March. In April, Chinese aluminum export jumped by 15% year-over-year, according to recent customs data.
While the severity of the impact is likely to vary by country and industry, automotive companies from the U.S. to Germany and Japan are all expected to be at risk of operational issues due to aluminum shortages. According to an industry group, Japanese automotive manufacturers sources around 70% of their aluminum supply from the Middle East prior to the conflict, while the country’s total aluminum imports from the region amounted to around a third of its entire supply. For automakers in the U.S., the war-related supply disruptions come on top of a 50% aluminum tariff imposed by the Trump administration, which had already increased the costs of acquiring supply from other parts of the world.
According to the Global Electronics Association, the electronics industry is also at a growing risk of business impacts as aluminum prices continue to rise. The industry uses aluminum in components such as printed circuit boards, heat sinks, enclosures and casings, connectors and cables, batteries and capacitors. The association also warned that oil and gas shortages caused by the closure of the Strait of Hormuz could put manufacturing operations in countries such as Taiwan and South Korea at risk, both major electronics manufacturing hubs. The U.S.-based trade group represents companies across the electronics supply chain, including Apple Inc., Nvidia Corporation, Dell Inc., and Siemens AG.
Helium Supply
Prior to the conflict, Qatar alone accounted for roughly a third of the world’s helium supply, a byproduct of natural gas processing. Helium is a particularly important material in the medical technology sector, where it is used to keep magnetic resonance imaging (MRI) machines running, and in the semiconductor sector, which uses helium in fabrication and cooling processes. Prolonged shortages could also impact industries such as the automotive sector, where helium is needed during manufacturing and testing processes.
With helium supply concentrated in a limited number of countries, companies would likely struggle to replace supply in the short-term if the Strait of Hormuz remains closed. According to an estimate by the Germany-based Ifo Institute, the European Union imports 40% of its helium supply from Qatar, leaving members states at risk of supply shortages if shipments remain halted.
Netherland-based Koninklijke Philips N.V., one of the world’s biggest healthcare technology companies, recently confirmed that it is already facing difficulties in sourcing enough helium supply for its MRI and computed tomography (CT) scanners.
In Asia, South Korea and Taiwan are expected to be of a particularly high risk of business impacts, with the former importing around 65% of its supply form the Middle East. Shortly after the ceasefire went into effect in April, the Taiwan Semiconductor Industry Association (TSIA) had called on the country’s government to build up a strategic reserve of helium and liquified natural gas (LNG) to better shield the industry from business disruptions in the future. Shortages of raw materials such as helium could force Taiwanese semiconductor companies to focus on higher-margin chips for AI infrastructure over less profitable components, potentially worsening a growing imbalance in component supply driven by skyrocketing demand in the AI industry.
In the electronics sector, memory production is often particularly helium intensive due to high-heat etching and deposition steps needed for dense 3D stacking. South Korea-based SK Hynix Inc. and Samsung Electronics Co., Ltd., which account for a significant portion of the world’s Dynamic Random Access Memory (DRAM) and high-bandwidth memory (HBM) supply, could face business disruptions if helium supply remains tight, despite initial counter measures such as ramping up recycling activities and reallocating volumes. The companies are also believed to be looking for new sources of supply to curb the impact.
Japan on the other hand sourced around half of its helium supply from the U.S., potentially delaying business impacts for Japanese manufacturers, however, around a third of its supply still came from Qatar. Even if a peace deal is signed soon, Qatar already warned that it could take weeks, or even months, for helium shipments to return to pre-war levels.
Sulfur / Sulphur Supply
Prior to the conflict, companies in the Middle East accounted for around a quarter of the world’s sulfur, a by-product of smelting and refining nonferrous metals as well as oil and gas production, with much of the supply coming from Saudi Arabia, Qatar, Kuwait, Iran, and the United Arab Emirates. In total, around half of the world’s seaborne sulfur exports moved through the Strait of Hormuz prior to the conflict.
Sulfur is mainly used to make sulfuric acid, a raw material needed in industries such as chemicals, fertilizer making, and metal processing. Amid growing supply concerns, several countries have already banned sulfur exports to safeguard domestic supply.
In Turkey, an export ban went into effect on April 7 and will remain in place during the second and third quarter of the year, while China, the world’s largest sulfuric acid exporter, halted exports of sulfuric acid made as a by-product of copper and zinc smelting from May 1. India is said to be considering a proposal to do the same.
In the mining industry, sulfuric acid is needed by copper miners that use solvent-extraction technology on oxide ores as well as by high-pressure-acid-leach (HPAL) plants during nickel production. Chile and Indonesia, respectively the world’s largest producers of copper and nickel, are both at risk of production impacts due to sulfuric acid shortages caused by the war in the Middle East.
In Indonesia, which relied on shipments from the Middle East for around 75% of its sulfur supply, tightening supply has forced several nickel processing companies to reduce production by around 10% since March. According to some estimates, sulfur prices in Indonesia have jumped by more than 80% since the beginning of the war.
In Chile, copper producers are facing a supply crunch after imports of sulfuric acid from China, which account for almost 20% of the country’s supply, dropped to zero in March, even before its export ban went into effect. Some estimates suggest that a shortage of sulfuric acid could put around 1.1 million tons of Chile’s leached copper production at risk, roughly half of the country’s total annual refined copper output. Prices of sulfuric acid in Chile have reportedly more than doubled since the end of February.
The shortages also put copper production in the Democratic Republic of Congo (DRC) at risk, which uses solvent extraction and electrowinning (SX-EW) technology for around half of its copper output. By mid-April, mining companies had reportedly started to cut sulfur consumption as import prices surged, and some shipments were cancelled altogether. Cobalt producers in the country have reportedly curtailed sulfur usage for the same reasons. The DRC is one of the world’s biggest copper producers alongside Chile and Peru, as well as the world’s biggest source of cobalt, and gets the majority of its sulfur supply from the Middle East.
Fertilizer Supply (Urea, Ammonia & Sulfur)
In addition to impacts on the metal processing industry, shortages of sulfur have already had profound impacts on global fertilizer supplies, combined with shortages of other agrochemicals largely sourced from the Middle East, including urea and ammonia. Pre-war, the Middle East accounted for approximately 46% of global urea supply and 24% of global ammonia production, in addition to roughly 25% of global sulfur output.
Urea, the world’s most widely used fertilizer, was heavily exported from the Middle East to countries including India, Brazil, and China, which respectively received about 18%, 10%, and 8% of the region’s supply. The world’s largest urea facility, the Qatar Fertiliser Company (QAFCO) plant in Mesaieed, Qatar, has shut down following disruptions to natural gas supplies. That facility alone accounted for about 14% of global urea production.
Ammonia is also primarily used in fertilizer manufacturing, which consumes roughly 90% of the global supply, though it is also utilized in cleaning chemicals and refrigerants. Sulfur is similarly essential to agriculture, with approximately two-thirds of global production used in agricultural applications.
Asian countries are particularly dependent on Middle Eastern sulfur and fertilizer supplies, sourcing about 63% of sulfur imports, 35% of Gulf urea, and 64% of Gulf ammonia from the region. Africa is also highly exposed, receiving around 48% of its sulfur from the Middle East and importing roughly 80% of its total fertilizer needs. Governments and producers have already begun implementing measures in response to tightening supplies.
On March 9, India reduced natural gas allocations by 30% to major domestic ammonia suppliers amid fears of gas shortages, which has significantly reduced domestic production. China has meanwhile restricted urea exports to preserve domestic inventories.
Beyond direct disruptions in the Middle East, fertilizer production globally is also being affected by instability in liquefied natural gas supplies, since many fertilizer facilities depend heavily on natural gas feedstocks. Production stoppages have already occurred at three fertilizer plants in India and four of Bangladesh’s five major plants.
Elsewhere, even regions with alternative suppliers are expected to face sharply higher prices and increased competition for available product. In the U.S., for example, where many domestic fertilizers producers continue operations, farmers are already facing a fertilizer supply shortfall approaching 25% of expected 2026 demand amid increased international competition for supplies.
Extended shortages could significantly raise global food production costs, particularly because these disruptions are occurring during the spring planting season across much of the Northern Hemisphere. Reduced fertilizer availability could lower crop yields and place agricultural commodities from countries that depend heavily on fertilizer imports at heightened risk, including Indian rice, wheat, and pulses, as well as Brazilian sugar, corn, and soybeans. These impacts are also likely to intensify over time as farmers deplete existing inventories, reduce planting activity, and bring fewer agricultural products to market in the coming growing seasons.
Petrochemical industry material shortages
In addition to these major raw materials, shortages of other products have continued to worsen and could see negative impacts to long-term availability. Materials sourced from petrochemicals remain among the worst-impacted products from the Strait of Hormuz, including naphtha and methanol. Shortages of these materials have led to production stoppages at numerous chemical and plastic manufacturing facilities in Asia, which have in turn led to shortages of other plastic materials, such as plastic resins for food and industrial packaging. Shortages of another affected material, monoethylene glycol, could affect the production of polyester fibers and packaging.
Additionally, shortages of asphalt have been reported by construction industry organizations in Japan and Taiwan. Asphalt is usually made as a byproduct of petrochemical production. Another affected petrochemical byproduct is petroleum coke, which is used as feedstock for synthetic graphite production and could hurt graphite availability for automotive battery manufacturers.
Everstream clients are receiving more detailed insights and recommendations about this risk.
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