Qatar Energy announced a complete suspension of liquefied natural gas and various downstream product production, as supply shocks triggered by the escalating situation in the Middle East are spreading to the commodity markets.
Due to an Iranian drone attack, Qatar's largest liquefied natural gas export facility was forced to halt production on Monday. Qatar Energy subsequently issued a statement on Tuesday announcing the simultaneous cessation of production of urea, polymers, methanol, aluminum, and other downstream products. Following the announcement, aluminum prices on the London Metal Exchange surged by over 3.8%.
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Shipping through the Strait of Hormuz has been disrupted, affecting the supply of raw materials and the circulation of refined metals, as market concerns about interruptions in commodity supplies from the Middle East continue to escalate.
<h2>Production Halt Spreads from LNG to Chemicals and Metals</h2>
Qatar's liquefied natural gas export facility is the largest of its kind in the world, accounting for about one-fifth of global liquefied natural gas supply. The facility was forced to close following an Iranian drone attack on Monday, directly impacting the global energy supply landscape.
Qatar Energy subsequently announced the cessation of liquefied natural gas and related product production, further expanding the suspension to various downstream chemical and industrial products, including urea, polymers, methanol, and aluminum.
The escalation of conflict in the Middle East has nearly halted shipping through the Strait of Hormuz, affecting the normal circulation of raw materials and refined metals, further exacerbating market concerns about supply chain disruptions.
<h2>Supply Concerns Intensify, Aluminum Prices Surge</h2>
Aluminum prices on the London Metal Exchange saw an intraday increase of up to 3.8%, reflecting market concerns about tightening regional supplies.
Qatar Energy holds a 50% stake in Qatar Aluminum (Qatalum), one of the region's major aluminum producers, with the other joint venture partner being Norwegian company Norsk Hydro ASA. Norsk Hydro stated on Monday that the company is assessing emergency plans to avoid disruptions to customer deliveries.
According to the latest research report from Goldman Sachs, the Gulf Cooperation Council (GCC) countries and Iran together account for about 9% of global primary aluminum production (approximately 6 million tons), and about 20% of production outside of China. The vast majority of this output (80-90%) is exported through the Strait of Hormuz. The evolution of the regional situation could have a significant impact on aluminum supply by disrupting export capacity and raw material imports (bauxite/alumina).
Data shows that only one container ship passed through the Strait of Hormuz last Saturday, while the most recent shipment of bauxite to the UAE arrived on February 21. This indicates that the issue is not whether &#34;production capacity has been destroyed,&#34; but rather whether &#34;logistics have been blocked.&#34;
In addition to finished product exports, Middle Eastern aluminum plants are highly reliant on maritime transport for raw materials. The UAE imports approximately 5-6 million tons of maritime bauxite annually, almost all of which arrives through Khalifa Port. Although the port is currently undamaged, if shipping disruptions continue, smelters will face pressure on raw material supplies. Industry feedback indicates that smelters typically hold only about 20 days' worth of bauxite or alumina inventory, and once this time window is exceeded, the risk of production cuts will significantly increase
<h2>Limited Short-term Impact, but Mid-term Risks Should Not Be Underestimated</h2>
According to a Goldman Sachs research report, the current London aluminum price is approximately $700/ton higher than the fair value implied by &#34;visible inventory.&#34; The market has previously priced in a risk premium due to doubts about the progress of new supply from Indonesia and the funding driven by &#34;hard asset rotation.&#34;
Therefore, if the disruption is short (for example, within a week), the theoretical additional push on prices may only be about $50/ton, with limited impact. However, if the disturbance extends to a month, the impact will be significantly amplified:
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The global visible inventory days for aluminum will decrease from the originally forecasted 51 days to 48 days;
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In the extreme scenario of a 130% increase in European energy prices (energy costs account for about one-third of smelting costs outside of China),
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Aluminum prices could temporarily rise to $3,600/ton, which is about $400 higher than the current spot price, to maintain trend profit margins.
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Against the backdrop of low inventory and limited global idle capacity, prices may even experience temporary &#34;overshooting.&#34;
However, Goldman Sachs' baseline judgment remains that the average London aluminum price in the first half of 2026 will be around $3,150/ton. Its core assumption is that new capacity from Indonesia will gradually be released in the second half of the year, driving a rebound in global inventory and compressing the current risk premium

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Qatar Energy's LNG export facility has halted production following an attack by Iranian drones. Qatar Energy Company announced a complete suspension of the production of liquefied natural gas, as well as urea, polymers, methanol, aluminum, and other products, with supply shocks rapidly spreading to the commodity market. Coupled with shipping disruptions in the Strait of Hormuz, the market is concerned about restrictions on both aluminum exports and raw material imports in the Middle East. Goldman Sachs pointed out that if the disruption lasts for a month, aluminum prices could temporarily rise to $3,600

- Qatar Energy Company has announced a complete halt in liquefied natural gas and various downstream product production due to production disruptions stemming from increased tensions in the Middle East.  
- Following an Iranian drone attack on Qatar's largest LNG export facility, the cessation of production was expanded to include urea, polymers, methanol, aluminum, and more, causing aluminum prices to surge over 3.8% on the London Metal Exchange.  
- Concerns regarding supply chain disruptions in the region have intensified, with potential significant impacts on aluminum supply due to shipping route blockages in the Strait of Hormuz.

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LME aluminum jumps! Qatar Energy expands production cuts: urea, methanol, and aluminum completely halted