Avoid the Middle East! At least 5 iron ore cargo ships have changed course en route, heading towards Asia.

The ongoing escalation of conflicts in the Middle East is rapidly disrupting the global iron ore shipping trade landscape. According to CCTV News, in the early hours of the 12th local time, officials at a southern Iraqi port reported that two foreign oil tankers were attacked and set on fire within Iraq’s territorial waters. At least one person was killed, and 38 crew members were rescued. Iraq immediately suspended operations at its oil ports.

According to Xinhua News Agency, the UK Maritime Trade Operations (UKMTO) stated on the 12th that a cargo ship near the Strait of Hormuz was hit by an unidentified projectile and caught fire. As a result, transit through the Strait of Hormuz has nearly come to a halt, with several fully loaded iron ore carriers urgently changing their destinations, redirecting to East Asian markets. Iron ore futures prices also rose accordingly.

Based on tracking data from shipping analytics firm Kpler, at least five iron ore carriers have rerouted mid-voyage — three belonging to the UK mining giant Anglo American, and two to Brazilian miner Vale. These ships, originally headed to Bahrain and Oman, have now diverted to countries such as Vietnam, Singapore, and Malaysia.

This rerouting has had a particularly significant impact on the market for iron ore concentrate and pellet feed. The Middle East is a major global producer of direct reduced iron (DRI), heavily reliant on imported high-quality iron ore pellets. Kpler analyst Alexis Ellender noted, “The war in the Middle East has significantly tightened the supply of iron ore pellets.” The benchmark iron ore futures price in Singapore once surged over 1.3%, reaching $105.55 per ton, the highest since mid-January.

Ships are forced to reroute, with Bahrain and Oman bearing the brunt

Kpler data shows that Anglo American’s Cape Shangrila, originally destined for Bahrain, has now diverted to Singapore; Cape Jasmine, also headed for Bahrain, has changed course to Vietnam; Mineral Zimbabwe has shifted from Oman to other Asian countries. Two vessels under Vale, originally heading to Oman, have also diverted to Malaysia and other countries. Additionally, according to Kpler, some ships are stranded outside the Arabian Gulf, not continuing their voyages for now.

The Strait of Hormuz is one of the world’s most critical shipping lanes. Since the US and Israel launched strikes against Iran, Iran has responded by attacking transit ships, nearly halting maritime traffic through the strait. Meanwhile, the war has driven up freight and fuel costs, further increasing port arrival prices.

Bahrain and Oman are key centers for the production and export of pellet feed in the Middle East. Bahrain is both an importer and exporter of pellet feed; Oman has larger export capacity for pellet feed, with Vale operating a dedicated plant at its Sohar port. Macquarie Group estimates that the total DRI production in the Gulf countries will be about 14 million tons by 2025.

Wood Mackenzie research director David Cachot warned, “The current geopolitical turmoil exposes the obvious vulnerabilities of this already highly concentrated supply chain.” He stated that if pellet feed inflows or pellet ore exports are disrupted, the impact will “quickly spread to” the entire DRI industry.

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