The Commodities Feed: Iran Hits UAE And Bahrain Aluminium Plants

(MENAFN- ING) Energy – Oil jumps on Iran war escalation

Oil prices jumped at the start of the week as the Middle East conflict intensified and Iran‐backed Houthi militants entered the war. Brent crude surged as much as 3.7% to $116.75/bbl, while WTI briefly moved back above $100/bbl, as fighting extended into a fifth week.

Yemen‐based Houthis launched ballistic missiles at Israel over the weekend, following US‐Israeli strikes on Iranian nuclear facilities, raising fears of a broader regional escalation. The group has previously disrupted Red Sea shipping, forcing vessels to reroute and heightening concerns over energy supply chains.

Risks were further amplified by the deployment of an additional 3,500 US troops to the region and renewed rhetoric from US President Donald Trump, who said he wants to“take the oil in Iran” and could seize the export hub of Kharg Island.

There remains little sign of imminent peace talks.

Tight physical market conditions are also evident in the forward curve, with Brent's prompt spread in deep backwardation. The front‐month contract traded at a premium of more than $7/bbl on Monday, compared with a largely flat structure before the conflict, underscoring acute near‐term supply concerns.

Emergency stock releases are starting to trickle through but remain limited relative to the scale of the disruption. France has released around 580kb of oil products under the IEA's coordinated emergency programme, roughly 4% of its 14.5mb commitment, while the overall IEA release could add around 400mb to global supply, led by a 172mb contribution from the US Strategic Petroleum Reserve.

Positioning data shows speculative interest remains elevated despite some trimming. Speculators reduced their net long in ICE Brent by 21,579 lots to 407,125 lots as of last Tuesday, driven largely by a reduction in gross longs, while positioning changes in NYMEX WTI were modest. Ongoing geopolitical uncertainty and supply risks have continued to underpin risk‐on positioning in the oil market so far this year.

European natural gas prices also moved sharply higher, rising as much as 3.4%, as the escalation in the Middle East reinforced concerns over LNG availability ahead of the summer storage refill season. Prolonged disruptions risk slowing injections into European storage and intensifying competition for spot LNG cargoes at a time when global supply flexibility is limited. Adding to the pressure, a weeks‐long outage at a major Australian LNG facility due to storm damage has removed additional supply from the global market, amplifying Europe's exposure to external shocks as it heads into the injection season.

Metals – Aluminium jumps 6% after fresh Middle East attacks

Aluminium supply risks in the Middle East intensified over the weekend after Iranian attacks hit two major regional producers. Emirates Global Aluminium (EGA) said it sustained significant damage, while Aluminium Bahrain (Alba) is assessing the extent of disruption to its operations. Aluminium climbed as much as 6% to $3,492/t in early trading on the LME.

EGA confirmed several employees were injured, but has not yet clarified whether operations at its smelters in Abu Dhabi and Dubai have been suspended. EGA is the largest aluminium producer in the UAE and one of the biggest globally.

The latest escalation comes on top of already tightening supply conditions across the Gulf. Recent curtailments at Alba and Qatalum have already affected around 560kt of annual capacity, leaving close to 8-9% of regional supply at risk. With the Middle East accounting for roughly 9% of global aluminium production, any prolonged outages would further tighten the market, especially given the region's limited raw material inventories and dependence on uninterrupted shipping through the Strait of Hormuz.

We remain constructive on aluminium prices. The latest attacks increase the probability of a prolonged disruption scenario, where supply losses could persist even if geopolitical tensions ease, reinforcing upside risks to prices.

Positioning across metals remains mixed. CFTC data shows speculators reduced net long positions in COMEX copper by 10,860 lots for a 13th consecutive week to 35,802 lots, the least bullish positioning since September 2025. Managed money net longs in COMEX gold also fell, down 13,145 lots to 92,775 lots, driven largely by a reduction in gross longs, while silver saw a modest increase in speculative net longs, supported by fresh long entries.

Agriculture – US raises biofuel quota

The Trump administration has raised US biofuel blending mandates, requiring refiners to blend a record 25.82bn gallons of biofuels into gasoline and diesel this year – nearly 8% above last June's guidance. The higher quota reflects elevated gasoline prices linked to the Iran conflict, reviving interest in biofuels as a cost‐containment tool. While smaller refiners warn of higher compliance costs, the policy is expected to support both the energy and agriculture sectors, providing income relief for US farmers amid weak crop prices and rising input costs.

In Brazil, the Agriculture Ministry has advised farmers to delay fertiliser purchases after prices spiked on Middle East tensions. With winter crop planting largely complete, near‐term fertiliser demand has softened, giving farmers more flexibility in procurement, while highlighting Brazil's continued reliance on imported fertilisers.

Brazil's sugar market remains in focus as production winds down. UNICA data shows cane crushing in Centre‐South Brazil fell 29.7% year-on-year in the first half of March, with sugar output down 88.6% YoY as the season nears its end. Despite weaker near‐term output, cumulative sugar production is slightly higher YoY, while speculative positioning has turned less bearish, with net shorts in No.11 raw sugar falling for a third consecutive week. The shift reflects aggressive short‐covering and tighter supply expectations, partly driven by increased diversion of cane to ethanol.

CFTC data shows mixed positioning across US grains. Net speculative longs in CBOT soybeans fell for a second consecutive week on fading optimism around US‐China trade talks, while corn saw a sharp increase in bullish bets driven by short‐covering. In wheat, net shorts continued to unwind, leaving positioning at its least bearish level since mid‐2022, supported by new long positions and concerns that higher fertiliser costs could influence planting decisions later in the year.

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