BAHRAIN – APRIL 17: Aluminium ingots seen at the Aluminium Bahrain B.S.C plant in Bahrain, Tuesday, April 18, 2006. (Photo by Phil Weymouth/Bloomberg via Getty Images)
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Aluminium Bahrain, which hosts the world’s largest smelter of the metal, said on Sunday its facility was subjected to an Iranian attack as the U.S.-Israel-led war extended into a second month.
The company, known as Alba, said in a statement that the attack happened on Saturday.
“Alba is assessing the extent of the damage to its facilities and remains focused on maintaining its operational resilience and the safety of its employees,” Alba said.
The company had cut production capacity by 19% of its 1.6 million tons of annual output “as an operational measure to preserve business continuity amid ongoing supply and transit disruptions affecting the Strait of Hormuz,” the company said on March 15.
The production cuts have been adding to fears of a global shortage of the metal. Aluminum prices surged to four-year highs earlier this month before paring some of those gains. They remain 4.3% above their Feb. 27 levels.
While aluminum may be the most abundant metal on earth, it is crucial to the functioning of the world economy. It is an essential material across electronics, transport, and construction, as well as other industries such as solar panels and packaging.
LME Aluminum
Iran has been retaliating against U.S. and Israeli attacks that began on Feb. 28 by firing missiles and drones at its regional neighbors.
The United Arab Emirates said on Sunday its air defenses were dealing with the latest salvo of incoming missiles.
Houthis enter the fray
On Saturday, Iranian-backed Houthi fighters said they launched a missile strike against Israel, the first time the group has participated in the war.
Analysts have told CNBC that the Houthis could attempt to choke off maritime traffic through the Bab el-Mandeb Strait separating the Arabian Peninsula and the Horn of Africa — through which ships must pass to reach the Red Sea and the Suez Canal — adding to pressure on global trade.
On Saturday, Danish shipping giant Maersk, widely regarded as a barometer of global trade, responded to reports of drone activity and explosions that occurred at the Port of Salalah in Oman.
The Bab el-Mandeb Strait was estimated to account for 12% of seaborne oil trade and 8% of liquefied natural gas trade in the first half of 2023.
Iranian forces have already effectively shut down the Strait of Hormuz between Iran and the Arabian Peninsula, through which about 20% of the world’s oil supplies moved before the war.
Oil prices on Friday closed at their highest level in more than three years, as President Donald Trump’s pivot toward negotiations with Iran failed to ease market fears about the huge supply disruption in the Middle East.
U.S. crude oil prices rose 5.46% to close at $99.64 per barrel. International benchmark Brent crude prices gained 4.22% to settle at $112.57.
Trump’s move to give Iran a 10-day extension to open the strategically vital Strait failed to soothe supply concerns. The president said in a social media post on Thursday that talks with Iran were “going very well” despite “erroneous statements to the contrary by the Fake News Media, and others.” Iran says it has not engaged in any negotiations.
As part of the announcement, the U.S. president said he would pause attacks on Iran’s energy infrastructure through April 6.
Meanwhile, a growing U.S. troop presence in the Gulf has raised fears of a ground invasion, possibly prolonging the war and uncertainty for the global economy.
The U.S. Central Command confirmed the 31st Marine Expeditionary Unit, made up of roughly 3,500 Sailors and Marines, arrived in the Middle East on Saturday.
“U.S. Sailors and Marines aboard USS Tripoli (LHA 7) arrived in the U.S. Central Command area of responsibility, March 27,” according to a statement posted on X.
On Sunday, Iran threatened to target U.S. and Israeli educational institutions in the region unless the U.S. condemns attacks on Iranian universities, according to Iranian media which quoted its armed forces. It posted images of damage to the University of Science and Technology in Tehran, which it blamed on U.S. attacks.
Diplomatic efforts continue
With the economic repercussions from the war extending far beyond the Middle East, Trump is under growing pressure to end Iran’s chokehold on the Strait of Hormuz.
Pakistan said Saturday that Saudi Arabia, Turkey and Egypt will send their top diplomats to Islamabad for talks aimed at ending the war.
Pakistan’s Foreign Office said in a statement Sunday that Foreign Minister Ishaq Dar met with his Turkish counterpart Hakan Fidan to discuss the Iran conflict among other issues.