20 million tonnes of iron ore trade disrupted by Middle East tensions

According to the senior Rio Tinto executive, this disruption covers part of the trade flow previously destined for the Middle East, some of which has now been redirected towards Asian markets.

According to published reports, the closure of the Strait of Hormuz — a vital passage for 20% of the world's oil and liquefied natural gas (LNG) — has driven a sharp rise in dry bulk freight rates since Operation Epic Fury began in late February.

"The closure of the Strait of Hormuz has not only raised production costs through higher diesel prices, it has also sharply increased transport costs because vessels must reroute and burn more bunker oil." — Matthew Holcz

Pointing to the asymmetric effect of the crisis on producers, the Rio Tinto executive said that while low-cost producers have seen only a modest impact, the pressure on higher-cost producers has been far more severe, with a disproportionate effect on prices.

"We saw last year that when prices fell to around $90 per tonne, high-cost producers left the market; so current prices appear well supported at those levels."

Iron ore is currently reported at $105.10 per tonne, up from $97.65 a year earlier.

Despite measures by Australia's federal and state governments to secure diesel supply, iron ore miners in Western Australia — the world's largest exporter of this steelmaking raw material — continue to face visibility and fuel-access challenges. Noting that Rio Tinto holds two months of fuel stock in the Pilbara, Holcz said that beyond that window there are uncertainties, and it remains to be seen what the cost impact will mean for the business and ultimately for market prices.

Market participants nevertheless expect that the lifting of China's trade restrictions on BHP products, together with the redirection of high-grade concentrates towards Asia amid the conflict, could strengthen seaborne iron ore supply to Asian markets in the second quarter of 2026.