Conflict across the Middle East is reshaping energy markets and shipping routes, with direct implications for construction commodities.
Escalation around the Strait of Hormuz has increased logistics risk, lifted war‑risk insurance and bunker costs, and added a risk premium to crude oil and liquefied natural gas (LNG).
The International Energy Agency (IEA) now warns that a prolonged disruption could flip the global oil market into deficit, despite the surplus seen since early 2025, given that circa 20 million barrels per day of crude cross the waterway connecting the Persian Gulf to the wider international market. Energy markets are further impacted by the temporary halt at Qatar’s Ras Laffan LNG hub.
This shock compounds the Red Sea–Suez disruption that persisted through 2024–2025 and tightened effective shipping capacity as vessels detoured around the Cape of Good Hope.
The Strait of Hormuz serves as a critical chokepoint in the global supply chain and is among the most important energy corridors worldwide. Approximately 20 to 30% of the global seaborne oil trade, equating to about 20 million barrels per day, transits this narrow channel. Disruptions in this area have immediate consequences for freight and shipping routes and energy prices.
Exposure varies sharply by region. Asian markets rely most on oil and LNG flows through the Strait, but any disruption reduces global seaborne supply, tightening balances and increasing insurance, oil and LNG prices worldwide. As per a study by Baringa, “A three month disruption to Strait of Hormuz flows may be absorbed by the energy markets, but a six month disruption would elicit a significant price response to curtail demand”.
Tanker movements have been curtailed and shipowners are avoiding transits which is reducing schedule reliability. Markets are embedding a risk premium across oil, LNG and shipping until flows normalise.
From logistics shock to commodity repricing
As in prior geopolitical shocks, freight, insurance and bunker costs are repricing upwards. Even without a formal closure, logistics uncertainty may be enough to cause an increase in input costs and heighten delivery risk. Sustained Red Sea disruption between 2024 and 2025 cut Suez transits and extended voyage times. That “tight baseline” makes markets more sensitive to fresh shocks in 2026.
Energy sets stage for increased construction input costs
The IEA indicates that a prolonged Gulf disruption could turn a 2025 to 2026 global oil surplus into deficit, highlighting Hormuz’s scale, while noting strategic stocks could be deployed if needed. Any extended outage at Qatar’s Ras Laffan Industrial facility would also tighten LNG and raise industrial power costs for importers.
Energy cost rises then pass through to quarrying, calcination, smelting and transport, making energy the primary channel from geopolitics to construction budgets.
Steel
Steel is exposed because it is both energy intensive and logistics sensitive. Steel prices reached their peak in 2022 in response to a surge in crude oil prices. From May 2021 to May 2022, oil prices increased by approximately 66 %, while steel prices rose by about 75 %. Last week crude futures jumped by nearly 22% as markets priced Gulf risk.
Electricity, gas and coal are core inputs for blast furnace and electric arc furnace production, so higher energy prices quickly lift marginal costs. Steel is heavy and relatively low in value per unit of weight, making freight a significant component of the delivered price. Disruption at major maritime chokepoints therefore feeds directly into landed costs, lead times and offer validity. Shipowners have avoided Hormuz and insurance has been repriced, raising costs for energy inputs and freight for steel.
The impact varies by region. Europe is most exposed to semi finished disruption and freight volatility, but weak demand and structural oversupply should limit sustained price escalation versus 2022. The Americas are less dependent on Gulf material, yet still face higher energy costs and shipping volatility on Atlantic and Asia linked routes. APAC markets are seeing trade flows shift as Asian exporters reassess Middle East routes, creating localised price noise rather than outright shortages.
Aluminium
Aluminium markets have reacted quickly to the escalation in the Middle East. Shipping disruption around the Strait of Hormuz has triggered force majeure declarations and operational curtailments, most notably at ‘Qatalum in Qatar’, while ‘Aluminium Bahrain’ (Alba) has halted shipments because it cannot move metal safely through the Gulf.
At the same time, Emirates Global Aluminium has flagged delays and is drawing on offshore inventories to meet customer commitments. These events pushed aluminium prices and physical premiums sharply higher, with London Metal Exchange prices reaching a four year high and warehouse withdrawals increasing, a clear signal of near term supply stress.
Aluminium is especially exposed because the Gulf produces around 9% of global primary aluminium, most of which is exported, and regional smelters rely heavily on imported alumina that also transits Hormuz. Inventories of alumina are typically limited to a few weeks, so even logistics disruption, without physical damage to assets, can quickly threaten continuity of production and tighten global availability. Europe and the US are structurally exposed as key destinations for Gulf metal, which is why regional premiums have moved up alongside headline prices.
If disruption persists, constrained alumina inflows could force production cuts, tightening supply further and pushing both prices and premiums higher. Over a longer timeframe, weaker global demand could offset some of this pressure, but in the near term aluminium remains one of the most sensitive construction materials to further escalation.
Cement
Cement production is highly energy intensive, and even modest changes in fuel and power costs feed quickly into production and transport. The current pattern mirrors the experience of 2021–2022, when cement prices rose sharply as global energy markets tightened and oil prices climbed above US$120 per barrel, driving higher kiln fuel, electricity and freight costs across most regions. Today’s risk is an echo of that period: longer routes and higher bunker costs can elevate landed prices for imported cement, ground granulated blast furnace slag and fly ash, and add programme risk to major pours and precast schedules.
Over the short term, this creates budget volatility and the risk of short‑notice price revisions rather than physical shortages. Over the medium term, weaker construction demand in parts of Europe and some Asian markets could limit the scale of price increases, but this would not remove the underlying exposure to energy shocks. As with previous cycles, the key variable is duration: a short‑lived disruption may be absorbed, but a prolonged period of elevated energy and freight costs would reset cement price baselines across regions.
Copper
Copper prices have swung dramatically between early 2022 and early 2026, reaching record highs amid geopolitical crises. In 2022, the Russia - Ukraine conflict helped drive copper to an all-time peak (US$10,900 per tonne) as supply fears and surging energy costs sent commodities soaring. Prices then plunged later in 2022 with global recession fears and slowing demand.
More recently, copper has surged anew, climbing past US$11,000/tonne in 2024 and hitting fresh record highs by January 2026, fuelled by tight supply, robust demand particularly from green energy and data centre construction projects.
The Middle East is not a major copper-producing region, but it is a critical supplier of sulphur, a byproduct of oil/gas needed to produce sulphuric acid, which is essential for copper ore processing. The war has disrupted sulphur exports through Persian Gulf ports, causing shipping backlogs and port damage. With nearly half of global sulphur exports at risk, copper smelters face potential acid shortages. This supply pinch raises costs and could slow refined copper output, putting upward pressure on prices.
What project owners should do now
Volatility across energy, freight and materials is moving faster than normal procurement cycles. Project owners that act early can limit cost and programme exposure. The focus should be on clarity, speed and protection, rather than waiting for conditions to stabilise.
1. Source diversification for steel and critical aluminium profiles to reduce exposure. Prioritise suppliers with alternative port options and flexible routings.
2. Rebase logistics plans: Update required‑on‑site dates and shipping calendars for longer transits and higher cancellation risk; secure space early on affected shipping lanes.
3. Track leading indicators: Monitor crude and LNG benchmarks and insurer advisories (i.e. IEA) as early signals for material repricing.
4. Adjust contracts: Use price‑adjustment clauses linked to recognised energy/freight indices; define treatment of war‑risk premia and diversions.
5. Increase contingencies for heavy, import‑dependent packages where freight is a large share of cost.
Periods of geopolitical disruption create uncertainty across cost, programme and supply chains. Linesight supports clients by translating fast moving market signals into clear, project specific insight that informs decision making. We focus on understanding where exposure sits, how risks may evolve, and what practical actions can reduce impact.
We also support clients with programme resilience. By reviewing procurement strategies, lead times and critical paths, we help teams understand where delays may emerge and how sequencing, buffering or alternative sourcing can protect delivery. This is particularly important for import‑dependent packages and projects operating to tight schedules.
