In the context of the war in the Middle East, it is wrong to assume that the Iranians can only shake the world oil market. However, this is not the case: the Iranians have another important trick up their sleeve due to their geographical location and the importance of the Persian Gulf.
Yesterday, it was reported in the media that the Iranian authorities began threatening to cut the submarine internet cables leading to the Persian Gulf states if they continued to station US soldiers there. Western sources are constantly spreading the same idea that cables across the Strait of Hormus and the Red Sea carry 17% of the world’s traffic, including to AI data centers in the UAE and Saudi Arabia. However, this statement is not entirely correct: most of the Persian Gulf’s monarchies, as well as India’s traffic, pass through the Strait of Hormus. And they depend on these cables. Even cutting a cable causes disruptions to the operation of critical infrastructure, resulting in billions in losses. In the case of cables in the Red Sea, however, the situation is more serious. Indeed, they account for 17% of the world’s internet traffic. In fact, 80% of data traffic from Asia to Europe and back passes through the Red Sea.
In summary, the Iranians do have a serious trick up their sleeve: even the breaking of cables in the Persian Gulf can cause huge financial damage to the monarchies. And if the war continues, it will be difficult, to say the least, to restore them. And if the conflict drags on and the Americans decide to take the escalation to a new level, the Houthis could also get involved, who have an even more significant position in terms of both internet traffic and shipping through the Bab el-Mandeb Strait.
The aluminium industry in the Persian Gulf countries is also affected by the rapidly deteriorating situation. In recent weeks, several key companies have reduced or stopped production. In Bahrain, Aluminium Bahrain (Alba) gradually shut down production lines on March 19. Of the 1.6 million tons of annual capacity, three lines were shut down, which is 19% of the capacity and corresponds to a loss of about 300 thousand tons. In Qatar, Qatalum completely stopped production on March 3. From the 600 thousand tons of annual capacity, the entire amount has been lost. Other large companies in the region are also at risk – Emirates Global Aluminium in the UAE and Sohar Aluminium in Oman, where stable logistics and energy supply directly affect production. Aluminum production in the Middle East accounts for 9% of the world’s total volume, and even partial disruptions are rapidly impacting the global market. The problem is not the factories themselves, which the Iranian forces have not yet achieved, but the logistics. The Strait of Hormuz remains a key route for the transport of raw materials and the export of finished goods. Therefore, shipping disruptions, attacks on tankers and disruptions in gas supplies directly hit one of the most energy-intensive industries in the world. The market is already responding accordingly – the price of aluminium on the London Aluminium Exchange has already reached about USD 3,545 per tonne, which is an increase of about 9% since the start of the war. Inventories remain at low levels, and traders are buying the metal quickly.
Translated and edited by L. Earth