Which European sectors could show resilience in light of the conflict in the Middle East and the resulting oil shock?
20 MAR, 2026
Daniel Lurch, manager of the JSS Sustainable Equity - Strategic Materials at J. Safra Sarasin
The conflict in the Middle East and a potential oil shock could support the European mining and metals sector in the short term. Aluminum represents a special case. The Middle East accounts for 8-9% of global production, with Qatar, the United Arab Emirates, and Bahrain among the main producers. Since smelting operations depend on a stable gas supply, imported alumina, and open export routes, any disruption in the Strait of Hormuz could lead to a contraction in supply. Restarting idle capacity, estimated at nearly 1 million tonnes in Europe, could take 6 to 12 months, which would benefit European producers. This could limit a rapid supply response, in addition to possible plant shutdowns in the Middle East.
Copper could also benefit from price support. Mines in the Democratic Republic of Congo and Zambia partly rely on imported sulfur to produce sulfuric acid, a key leaching agent used in processing oxidized ores. The Middle East accounts for around 20-25% of global sulfur production. Copper prices could rise due to supply disruptions, favoring diversified European mining companies.
Another sector that could benefit is fertilizers. Iran and Gulf countries are among the main exporters of ammonia and urea. Rising gas prices, a critical cost factor accounting for about 70-80% of ammonia production costs, along with logistical challenges could reduce exports and improve margins for European producers.
In the long term, this situation improves the outlook for gold demand. In the short term, a strong dollar may weigh on prices. However, geopolitical risks tend to push central banks to accelerate diversification into gold reserves, with purchases in recent years exceeding 1,000 tonnes annually.
