Hey commodity and mining investors! 🚨 The Iran conflict’s ripples are way bigger than just oil—this geopolitical storm is shaking up fertilizers, industrial metals, rare minerals and more, and it’s reshaping global supply chains for good. Let’s break down how this Middle East crisis is sending shockwaves across every corner of the commodities market, and which sectors are set to win (and face pressure) from the chaos!
Since the US and Israel launched military strikes on Iran at the end of February, the Middle East conflict has raged for nearly two weeks. The market’s initial reaction centered on oil prices—Brent crude futures once surged to $120 a barrel. Yet as the conflict drags on, the shockwaves of this geopolitical storm are spreading rapidly: fertilizers, industrial metals, chemicals and even rare gases are experiencing a silent supply shakeup. Analysts warn that disrupted shipping through the Strait of Hormuz and regional production halts are reshaping the global supply and demand landscape for commodities, with impacts stretching far beyond the energy sector itself.
Oil is the epicenter of this storm. Randy Ollenberger, oil and gas analyst at BMO Capital Markets, noted that the current conflict is “the biggest shock to the oil market in decades”. While oil prices have pulled back from the $120 a barrel high to the $90 range after major economies announced the release of strategic reserves, Ollenberger believes the market is still underestimating the true scale of supply risks. “The longer this conflict lasts, the more jittery the market will become,” he stated.
Even if the hostilities end quickly, the fundamentals of the oil market have already shifted: global inventories are tightening, and market expectations of a supply glut have been completely dashed. Shipping data through the Strait of Hormuz reflects the tensions in the most intuitive way: a waterway that normally sees 80 oil tankers pass through daily now has only a handful of vessels in transit. Storage bottlenecks and refinery shutdowns are piling pressure on every layer of the oil supply chain. Ollenberger emphasized that as long as the threat of an expanded regional conflict persists, oil price risks will remain tilted to the upside.
If oil is the lifeblood of the economy, fertilizer is the cornerstone of food—and this sector is taking a direct hit. John McNulty, chemicals analyst at BMO, said the Middle East accounts for about 15% of global polyethylene production, and with supply constrained, industry operating rates could quickly break through 90% and even approach full capacity. Polyethylene producers in the US and Europe have raised prices one after another, and the industry mood has abruptly shifted from a supply glut just a few months ago to tightness. McNulty believes this shift will bring margin expansion opportunities for major producers such as Dow, Lyondell and Westlake, while rising prices for raw materials such as sulfur may also benefit titanium dioxide producers like Tronox and Chemours.
The fertilizer market has reacted even more violently. Joel Jackson, BMO analyst, pointed out that nitrogen fertilizer prices have risen by about 30% since the outbreak of the conflict. Middle Eastern countries account for nearly half of global urea exports, and together with Russian supply, the global nitrogen fertilizer market is highly concentrated. As European natural gas prices rise and Middle Eastern exports are hindered, the cost advantages of North American fertilizer producers such as CF Industries and Nutrien are expanding. Jackson warned that a sulfur shortage could eventually push up phosphate fertilizer prices through cost pass-through, which in turn will impact global agricultural production costs.
The metal market’s reaction varies by variety, but aluminum is undoubtedly the leader. Helen Amos, metals and mining analyst at BMO, analyzed that the direct reason for aluminum’s strong performance is supply risk: about 9% of global aluminum production comes from the Middle East, and up to 5 million tonnes of capacity in the region may already face disruption. At the same time, iron ore has received support from its role in regional pellet supply, and thermal coal prices have risen alongside natural gas prices. In contrast, copper and nickel have lagged relatively, mainly weighed down by overall risk aversion driven by inflation fears and a stronger US dollar. Amos believes the conflict may ultimately strengthen the long-term trend in favor of electrification and metal demand; energy security concerns are likely to accelerate global efforts to reduce fossil fuel dependence, while driving the strategic stockpiling of critical industrial metals.
The outlook for battery metals is more complex. George Heppel, BMO analyst, noted that lithium production faces low short-term direct risks from rising sulfur costs, but if supply disruptions persist, it could impact refining activities in China, the world’s largest lithium processing hub. Nickel production faces greater risks because nickel extraction is highly dependent on sulfur—especially in Indonesia, where high-pressure acid leaching operations cannot proceed without sulfuric acid.
Beyond traditional industrial metals, the conflict may also spawn new growth points in demand. Analysts point out that modern warfare consumes large amounts of metals used in advanced weapons systems such as drones and missiles, which could boost demand for critical minerals such as tungsten, rare earth elements and antimony.
In the 2025 Top of Metals interview, Ali Haji, CEO of American Tungsten Ltd. $AMERICAN TUNGSTEN & ANTIMONY LTD(ATALF)$(CSE: TUNG | OTCQB: DEMRF | FSE: RK9), elaborated on the company’s latest developments and next steps. American Tungsten is a Canadian
exploration company focused on high-potential tungsten and magnetite assets in North America. The company is advancing the Ima Mine project in Idaho towards commercial production to address metal scarcity in North America. It has joined the US Defense Industrial Base Coalition to support the defense sector and completed an oversubscribed financing of CAD 7 million, demonstrating strong market confidence in its critical metals strategy.
With the duration and escalation of the conflict still uncertain, analysts generally believe the commodities market will remain highly sensitive to any developments in the Middle East. Even if shipping lanes can be restored quickly, the current situation has altered the supply landscape across multiple key areas of the global resources industry. From fertilizer shortages that could drive up food prices to tight aluminum supplies that may lift the cost of automobiles and building materials, global consumers may soon feel the economic pressure from this faraway conflict. For investors, the market focus has shifted from a simple “oil premium” to a broader “commodity supply chain restructuring”. In this time of great uncertainty, companies that can flexibly respond to regional supply risks and have a diversified production capacity layout are set to seize the upper hand in the new round of price volatility.
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