When Iran bombed two aluminum smelters in the United Arab Emirates and Bahrain late last month, it took out roughly 3 million metric tons of yearly aluminum capacity from the global market in the span of a couple of days. The sites belonged to Emirates Global Aluminium and Aluminium Bahrain, two of the largest smelters in the Middle East, and represented roughly half of the total primary aluminum production in the region, which accounts for over 20% of the global non-Chinese supply.
Aluminum prices jumped as a result, recording a surge of over 11% as of April 16 on the London Metals Exchange. That’s the highest price since 2022, when Russia, one of the major global producers of primary aluminum, invaded Ukraine.
With the Abu Dhabi smelter saying it will require at least one year to repair the damage from the Iranian strikes, this surge in prices is unlikely to stabilize any time soon, especially if Iran continues to control the Strait of Hormuz, the primary artery for moving Middle Eastern aluminum to global markets.
The supply chain disruption is likely to have complicated consequences for a variety of global sectors — and particularly energy, where aluminum is used extensively for overhead power transmission lines, solar panel frames, wind turbine structures, and both utility-scale and EV batteries. And this is just one example of the overwhelming energy consequences of the war in Iran, beyond its most obvious effect on oil prices.
Things are especially volatile for the U.S., which produces only a fraction of the aluminum it consumes. The country is in the midst of an historic expansion of its energy infrastructure to power AI data centers and broader electrification, and is already grappling with growing electricity prices.
And as Uday Patel, senior research manager for global aluminum markets at Wood Mackenzie, notes, the U.S. has increasingly relied on primary aluminum — meaning non-recycled aluminum that has never been processed or used before — from the Middle East since imposing steep 50% tariffs on Canadian imports in 2025. These tariffs have driven up the regional premium, which is the surcharge paid on top of the London Metal Exchange benchmark, because a higher U.S. price is required to incentivize foreign suppliers to continue shipping their metal into the country despite the additional cost.
In January, for reference, U.S. aluminum buyers were already paying a 68% premium over the LME price.
“The situation in the Middle East will add further upward pressure to the premiums, which are already very high and will get higher as people compete to get metal,” Patel said, adding that anyone involved in the production of energy equipment, such as wiring cables, is likely to see an increase in costs. “The U.S. is absolutely in a bind at the moment.”
‘It’s going to be expensive’
As Patel explains, this complicated situation “would have never happened” if President Trump hadn’t put the Section 232 tariffs on Canadian aluminum imports in March 2025.
“Canada was historically a major supplier to the U.S… and what happened was that the Canadians [started] shipping more to Europe and broadened the geographic footprint of where they sell metal,” Patel said.
According to data from the U.S. Department of Commerce, imports of unwrought aluminum from Canada, which were consistently above 200,000 metric tons per month before the tariffs, have been roughly 50,000 metric tons lower since April 2025. And without a steady supply from the Middle East, that gap is hard to fill.
Of course, part of the intention behind the tariffs was to incentivize domestic production of aluminum, which has been a core focus of the current Trump administration. But while it has indeed given a boost to the production of recycled aluminum, domestic production of primary aluminum at scale is more difficult.
“If you’re building an aluminum smelter, you want a long-term power contract at a competitive price,” Patel said. “Unfortunately, in the U.S., aluminum is not the only game in town for utilities. Data centers can pay double what aluminum can afford. If you’re building an aluminum smelter, you want a minimum of a 15-year power contract fixed, and that’s never going to happen.”
For the energy industry, a potential substitute for certain uses like wiring could be copper, which has better conductivity properties. Copper, however, has not only been historically more expensive, but it is essential both for the energy and the data center industry, which has led to demand soaring and the IEA predicting a potential 30% gap between projected supply and demand by 2035.
Assuming the U.S. doesn’t opt to either remove the Canadian tariffs or rely on China, another potential, though no less geopolitically complicated, solution that Patel noted is turning to Russian aluminum, which is not subject to a total global prohibition — but remains practically inaccessible to the U.S. due to a persistent 200% tariff and the reluctance of international banks to provide credit for transactions with Russia. This shift toward Russian supply is already reportedly happening in Japan and other Asian markets as they move to fill the supply void created by the Middle East crisis.
Generally, for the U.S., these solutions are either unviable or difficult to implement in the short term. As Patel said, “for the U.S. and for the electricity, distribution, and transmission sector, it’s going to be expensive,” Patel said.
