Stop fixating on oil prices alone! With the Strait of Hormuz in a "chokehold," your smartphone and down jacket could become more expensive

Text/Chen Haoxing

However, this time, it’s not just the oil tankers getting stuck. A “production halt announcement” from Bahrain Aluminum and a chart showing fertilizer prices soaring 30% in a week reveal a more frightening side of this crisis: a chain inflation that could eventually affect our tables, spreading from industrial metals to fertilizers, quietly beginning to take hold.

Industrial metals sound the alarm: Aluminum industry leads the shutdown

The “world oil valve” is being “choked,” with international crude oil prices rising sharply, affecting multiple industry chains.

Chung Yi, President and CEO of Samsung Display, pointed out that many raw materials in electronic devices (such as film materials) are made from crude oil. As oil prices surge, energy and raw material costs may increase, pushing up the prices of smartphones, PCs, and other electronic devices.

Textile fabric suppliers are also under pressure. For example, according to Dong Xiucheng, Executive Dean of the China International Carbon Neutral Economy Research Institute at the University of International Business and Economics, over 90% of shell jackets are made from petroleum. The price transmission mechanism involves crude oil price increases driving up chemical fiber raw material costs, which then lead to higher fabric and garment prices—an entire chain of rigid transmission.

Beyond textiles and manufacturing, the aluminum industry within industrial metals is also affected.

According to data from the International Aluminum Institute, last year, aluminum production in the Middle East accounted for about 9% of global output. Global manufacturers rely on the Strait of Hormuz for raw material imports and finished product exports. For example, raw materials like alumina depend heavily on maritime transport into the Middle East, while locally produced electrolytic aluminum is exported through this strait to Europe, Asia, and other major markets.

Wan Zhe, Professor at Beijing Normal University and Secretary-General of Pangu Think Tank, told China News Service’s Guoshi Express that the Middle East has a large-scale electrolytic aluminum industry, but its upstream alumina self-sufficiency is limited. As shipping through the Strait of Hormuz becomes obstructed, the region’s electrolytic aluminum production faces risks of both raw material input and product export disruptions.

Some signs have already appeared. Currently, Bahrain Aluminum, which operates the world’s largest single aluminum smelter, has begun phased shutdowns to conserve raw materials. The company announced it has started halting three production lines, which account for about 19% of its annual capacity (1.6 million tons). Meanwhile, Qatar Aluminum has also taken measures to halt production to cope with uncertainties in raw material supply and logistics.

Other industrial metals may also be affected to varying degrees. Wan Zhe cited Iran’s relatively abundant copper reserves, as well as significant zinc and lead resources. Although their share of global reserves is limited, geopolitical conflicts and changing supply expectations could amplify price fluctuations in these metals through futures markets and trade expectations.

A recent research report from Changjiang Securities indicates that, in the medium term, amid ongoing US-Iran tensions and expectations of Federal Reserve rate cuts, prices of industrial metals like copper and aluminum are likely to enter an upward cycle. In the long term, as anti-globalization trends intensify and countries pay more attention to resource security, the price centers of key industrial metals such as copper and aluminum still have room to rise.

Fertilizer supply chain “blockade”: a threat to the global table

The blockade of the Strait of Hormuz further threatens the global food supply.

The latest report from the Food and Agriculture Organization of the United Nations shows that rising energy prices related to Middle East conflicts have caused fertilizer costs to soar. In early March, European urea prices increased by nearly 30%. The organization warns that if instability continues, global fertilizer prices could be 15% to 20% higher than normal in the first half of the year, raising agricultural costs and food prices worldwide.

The German “Frankfurter Allgemeine Zeitung” recently published an article titled “The World Faces a Fertilizer Crisis,” stating that the Strait of Hormuz is a critical channel for the global agricultural supply chain, with about one-third of global fertilizer trade and nearly half of sulfur exports passing through it.

According to data from market research firm Kpler, 21 ships are currently stranded in the Gulf region, carrying nearly 1 million tons of fertilizer. Urea, one of the key fertilizer types, has seen prices rise sharply—about 30% in a week—reaching the highest levels since 2022.

Overseas analysts predict that this fertilizer supply chain disruption could increase U.S. “household food” inflation by about 2 percentage points, and overall U.S. inflation by approximately 0.15 percentage points.

Song Xiangqing, Vice President of the China Business Economics Society, told China News Service’s Guoshi Express that the Middle East is a major exporter of urea, ammonia, and sulfur. If transportation through the Strait of Hormuz is blocked, about one-third of global fertilizer trade will be affected. During the critical planting season, tighter fertilizer supplies will directly raise planting costs for wheat, corn, rice, and other major crops, further pushing up global agricultural product prices.

He further explained that fertilizer, as a fundamental input for agriculture, has a significant “amplification effect.” Fertilizer costs account for 50%–60% of variable costs in grain production. The impact of fertilizer shortages is often more severe than disruptions in grain trade.

When the guns fire in the Strait of Hormuz, the global supply chain once again reveals its fragility. From aluminum bodies of cars to bread on our tables, this distant “chokehold”—thousands of kilometers away—is creeping through invisible chains, inching closer to our living costs.

In the short term, this is a geopolitical game; in the long term, it may signal the arrival of a new era of “resource security premiums” worldwide.