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The Port of Sohar remains open and fully operational as of Friday March 6, according to a major logistics provider. The port, located on Oman’s eastern peninsula, has not been subjected to any bombardments or attacks as of the time of publication.
Duqm and Salalah, which host US military strategic fuel reserves according to the source, came under attack on March 3, the source said. According to Oman News Agency, several drones targeted fuel storage facilities at Duqm, with one striking a fuel tank; damage was contained and no casualties were reported. At Salalah, two drones were intercepted over Dhofar while a third fell near the port.
Operations at both the Port of Duqm and the Port of Salalah General Cargo Terminal were suspended until further notice following the strikes, according to Inchcape Shipping Services on March 3.
The logistics source said Duqm and Salalah were targeted by Houthis because they host US military strategic fuel reserves. Sohar, by contrast, “doesn’t have US involvement whatsoever – there is no military involvement whatsoever,” the source said.
A Strategic Framework Agreement granting the US military expanded access to the ports of Duqm and Salalah was signed on March 24, 2019.
Traders and producers are increasingly aware that Oman functions as neutral territory. “It’s like the Switzerland of the region,” the source said, noting that commercial passenger flights continue operating out of Muscat despite military conflict in neighboring areas. Yet confusion persists in the market about Sohar’s viability.
“There’s hesitation and a lack of understanding,” the source said. “We [tend to] lump everything together.”
That confusion translates to underutilized capacity. Sohar has limited but real capacity for both containers and bulk/break-bulk shipments. The source said material can be routed through Sohar’s quayside, though the actual bottleneck is trucking “because people will have to reroute trucks cross-border.”
The Oman International Container Terminal (OICT), now known as Hutchison Ports Sohar, reached the capability to handle 20,000 TEU vessels in 2016.
Trucking primary aluminium from a regional smelter to export from the port of Jeddah on the Red Sea coast of Saudi Arabia may cost up to $45 per tonne extra for March shipments, according to one trader.
Non-Saudi smelters in the region were also heard to be exploring the option of trucking metal to ports in Jeddah, but sources were mixed on the feasibility of the option and whether it would be enough to alleviate supply concerns long term.
“We are looking for solutions to truck and ship,” a Middle Eastern aluminium producer said. “At the moment we are not offering this solution for any of our new sales, but we are doing this to fulfil our [outstanding] contracts.”
But the math does not work at scale. “Even if the regional producers were able to truck their metal to another export port, like Jeddah in Saudi Arabia, to mitigate the Hormuz impact, you would need several trucks per minute, driving for 24 hours a day – it’s impossible when you’re competing with people, food and other key materials,” one trader said.
“There is also a food shortage in the Middle East, the trucks will have to be prioritized,” a second European trader said. A third trader noted that trucking metal to ports in Jeddah was “likely unrealistic for some smelters in the Gulf.”
European aluminium P1020 premiums in Europe were all sharply higher in the week to Friday March 6, as soaring billet premiums coupled with the disruptions to trade flows in the Middle East due to military action in the region added to preexisting deficit concerns.
Fastmarkets’ twice-weekly assessment of the aluminium P1020A premium, in-whs dp Rotterdam was $420-455 per tonne on Friday, compared with $360-390 per tonne a week earlier.
Upstream, the impact ripples across the Asia-Pacific alumina market. “The shutdown of the Strait of Hormuz has prevented some alumina produced in the Asia-Pacific region originally intended for the Middle East from being delivered,” a Shanghai-based alumina producer said.
Fastmarkets’ daily assessment of the alumina index, fob Australia was $303.25 per tonne on Friday, down from $303.44 per tonne a week earlier, reflecting bearish sentiment around smelters’ ability to import alumina cargoes amid the disruption.
The bind is structural: you cannot make aluminium without alumina. Most smelters lack a three- to four-month buffer of alumina inventory – leaving little room for supply disruption, the first source said.
Sohar Aluminium has its own discharge installations and berth in the port, suggesting an element of capacity at those facilities that is currently unused, market participants told Fastmarkets. However, alumina’s physical properties complicate overland movement. “It’s a powder but liquid as water – it flows easily through the smallest gap,” the source said. “Not something you can move easily unless in big bags.”
Copper flows into the Gulf are also interrupted, but as the region is a net consumer of the metal, broader market impact is limited. If anything, a slowdown in industrial activity across the Gulf could positively affect copper availability elsewhere, sources told Fastmarkets.
The more pressing concern is sulfur supply to African copper operations. Middle Eastern producers, including Abu Dhabi National Oil Company (ADNOC), ship granulated sulfur used in solvent extraction-electrowinning cathode production, and a sustained disruption could constrain output at major African mines.
However, supplies already in transit and on-water stocks provide some buffer, with market participants cautious about immediate price effects. “There’s still some stretch in the supply chain,” the first source told Fastmarkets.
An African copper producer told Fastmarkets that sulfur supply in the short term is not an issue but could become a risk if the Middle Eastern conflict persists.
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