Invisible Bottlenecks: Beyond Oil Iran War Pushes New Commodity Prices Higher

Market Analysis

The conflict surrounding Iran is rippling through global commodity markets in ways that go far beyond crude oil. While energy prices remain in the headlines, quieter but critical inputs for modern technology tungsten (wolfram), sulfur (and sulfuric acid) and helium are experiencing sharp price rises that threaten chip production, artificial intelligence development and defense manufacturing worldwide.

Wolfram, sulfur and helium play specialized roles in semiconductor supply chains. Tungsten is used in electrical connections within chips, sulfuric acid is essential for wafer cleaning, and helium is vital for stabilizing manufacturing processes and preventing unwanted chemical reactions. Disruptions to supply therefore translate directly into pressure on chipmakers and the high-tech industries that depend on them.

According to market reporting, tungsten prices have climbed to more than 3,000 US dollars per tonne, more than tripling since December. Demand from the defense sector is a significant factor, and industry insiders say there is no easy way to build large strategic stockpiles. Almontys CEO Lewis Black told CNBC that hoarding isnt feasible and that shortages are becoming structural despite steady demand.

Sulfur markets are under similar strain. Chinese sulfur prices rose by roughly 13 percent in March to about 621 dollars per tonne, and observers report increases of over 30 percent in parts of Africa versus pre-conflict levels. S&P Global analysts warn that a two- to three-month blockade of key shipping routes could trigger a severe supply shock. Market participants note that 56 percent of Chinas sulfur imports come from the Middle East, adding to vulnerability. HSBC has described the situation as a potential super-squeeze.

Helium often overlooked has seen prices roughly double since the war began. A reported attack on an industrial facility in Qatar, which supplies about a third of global helium, deepened concerns. Experts such as Christopher Ecclestone caution that supply recovery is likely to be slow, and many companies lack meaningful reserves: Defense contractors should have large tungsten stocks but do not, he told CNBC.

Chinas role compounds the squeeze. Even before the conflict escalated, Beijing had tightened control over critical resource flows, restricting tungsten exports and increasing regulation of sulfuric acid while boosting helium imports. Geopolitical tensions with the United States are accelerating these policies and, with chokepoints like the Strait of Hormuz under pressure, an apparent oversupply can rapidly flip to acute scarcity.

Financial and strategic research houses see longer-term implications. Goldman Sachs analysts, after numerous market discussions, note that Chinese supply chains are relatively resilient but that chemical raw-material shortages for certain manufacturers are riskier than expected. The Rhodium Group expects access to strategic raw materials to become a more frequent topic in geopolitical negotiation.

The current shortages represent a new shock coming on top of the pandemic and the Ukraine war. Companies are moving to diversify supply chains while some states are building reserves, but experts warn those measures will take time. The emerging squeeze on niche but mission-critical commodities highlights a growing vulnerability in modern industrial and defense supply chains, and underscores how geopolitics can suddenly transform commodity markets once considered stable.

Author: Saskia Reh, wallstreetONLINE editorial team.