by Michael Snyder,The Economic Collapse Blog:
The closure of the Strait of Hormuz has created a global supply chain nightmare that is unlike anything that we have seen before. As existing inventories and reserves of various resources are depleted, the consequences of this global supply chain nightmare will become more apparent. Asia is being hit the hardest, because Asia is much more dependent on commodities that are exported through the Strait of Hormuz than anyone else. In fact, the crisis in the Middle East is causing a shortage of Diet Coke in India right now. I never imagined that I would be writing about a shortage of Diet Coke in India in the middle of 2026, but this is how crazy things have become.
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Experts are warning that next month is likely to bea major tipping pointfor global supply chains…
JP Morgan commodities analyst Natasha Kaneva warned in a note last week that oil inventories have acted as a “shock absorber” for the global economy. But it could reach “operational stress levels” across the OECD group of industrialised countries as soon as next month.
As well as oil and gas, experts are warning about rising prices and supply constraints for fertiliser, metals such as aluminium, and several chemicals that are crucial to modern manufacturing.
In previous articles, I have written much about what the closure of the Strait of Hormuz means for the oil, natural gas and fertilizer markets.
Of course many others have also been talking about oil, natural gas and fertilizer.
But what a lot of people out there do not realize is that a significant portion of the world’s aluminumalso comes out of the Middle East…
The Middle East’s access to cheap, abundant power is part of what has made it a hub for global aluminum production over the past few decades. Aluminum is derived from a reddish mineral called bauxite. The process of refining and smelting the stuff requires an immense amount of energy, so facilities tend to be located in places where it makes financial sense to do so. When Iran began restricting ship traffic through the Strait of Hormuz, Gulf plants struggled to both import raw materials and export pure aluminum. Facilities in Qatar and Bahrain reacted to the uncertainty by shutting down smelters. Then, on March 28, Iran’s Islamic Revolutionary Guard Corps launched drone and missile attacks on two aluminum facilities in the region; the Al Taweelah plant in Abu Dhabi, which was responsible for making 1.6 million tons of the metal last year, has since been completely shut down. Those strikes led to a hold on about 3.2 million tons of the world’s aluminum—and a strain on economies, such as India’s, that draw from that supply.
Source: SGT Report
