The escalating conflict in the Middle East is triggering sharp reactions in commodity markets, impacting aluminum prices and the stability of the aviation sector. The United States has announced escort for ships on key routes and increased arms production in the face of dwindling ammunition stockpiles. Simultaneously, the International Energy Agency warns against a return to Russian gas, while the governments of France and the United Kingdom grapple with the rising costs of energy shields.

Rise in aluminum prices

Aluminum prices are recording their highest gains in a year and a half due to the escalation of hostilities in the Middle East.

Pressure on the defense industry

The White House is calling on defense companies to increase production due to the depletion of ammunition stockpiles after attacks on Iran.

Threat to airline margins

The lack of fuel price hedging by US airlines could lead to a financial crisis in the industry in the event of a prolonged conflict.

IEA warning

Fatih Birol warns against a return to importing gas from Russia, suggesting the use of the global increase in LNG supply.

The escalation of hostilities in the Middle East has become the primary factor shaping the current situation on global financial and commodity markets. On Friday, a sharp rise in aluminum prices was recorded, which analysts say is heading for its best week in eighteen months. Uncertainty is directly affecting the transport sector; US airlines that have abandoned fuel cost hedging may face a drastic drop in margins if the conflict with Iran persists. Although Lufthansa announced financial results above expectations, the company's management admitted that the situation in the region casts a deep shadow on forecasts for the entire civil aviation sector. In response to shipping threats, the US Secretary of Energy announced the readiness of the US Navy to escort commercial ships in the region to ensure the continuity of raw material supplies. At the same time, the White House is pressuring defense contractors to increase their production capacity. Intense attacks on targets in Iran have led to a significant depletion of US missile stockpiles. In Europe, the situation remains tense not only due to energy prices but also the stability of public finances. Fitch Ratings warned that energy support programs could be too heavy a burden for the budgets of France and the United Kingdom. The Arabian Peninsula and the Persian Gulf have been a key flashpoint for the global economy since the 1970s, where any destabilization translates into immediate fluctuations in oil and gas prices on exchanges in London and New York. In the natural gas sphere, International Energy Agency (IEA) chief Fatih Birol issued a stern warning against renewed dependence on supplies from the Russian Federation, pointing to the growing supply of liquefied natural gas (LNG) as a safer alternative. Interesting signals are also coming from Russia, where the port of Novorossiysk resumed oil loading after a technical break. On the other side of the world, in Asia and North America, Japan and Canada are strengthening energy cooperation, which is intended to be part of a broader strategy to diversify supply sources in times of crisis. The situation is also forcing the sovereign wealth funds of the Gulf states to tap into reserves accumulated over the years for a „rainy day”. „IEA chief warns against return to Russian gas amid global LNG surge” — Fatih Birol

Mentioned People

  • Fatih Birol — Head of the International Energy Agency, warning against Russian gas.
  • Mark Carney — UN Special Envoy for Climate Action and Finance, visiting Japan.