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

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The ongoing escalation of conflict in the Middle East is rapidly disrupting the patterns of seaborne iron ore trade. According to CCTV News, in the early morning of the 12th local time, officials at the southern port of Iraq reported that two foreign oil tankers were attacked and caught fire within Iraqi territorial waters, resulting in at least one death and 38 crew members being rescued. Iraq immediately suspended operations at its oil ports.

According to Xinhua News Agency, the British Maritime Trade Operations office said on the 12th that a cargo ship near the Strait of Hormuz was hit by an unidentified projectile and caught fire. As a result, traffic through the Strait of Hormuz was almost paralyzed, and several cargo ships loaded with iron ore urgently changed their destination en route, turning toward East Asian markets, causing iron ore futures prices to rise.

According to tracking data from shipping analytics company Kpler, at least five iron ore cargo ships have changed course mid-voyage—three belonging to British mining giant Anglo American, and two to Brazilian miner Vale. These ships, originally bound for Bahrain and Oman, have now been redirected to countries such as Vietnam, Singapore, and Malaysia.

This route adjustment has had a particularly significant impact on the market for iron ore concentrates and pellets. The Middle East is a major global production base for Direct Reduced Iron (DRI), heavily dependent on imported high-quality iron ore pellets. Kpler analyst Alexis Ellender commented, "The Middle East war has greatly tightened the supply of iron ore pellets." The Singapore iron ore benchmark futures price surged over 1.3%, reaching $105.55 per ton, hitting a new high since mid-January.

Ships forced to reroute, Bahrain and Oman bear the brunt

Kpler data shows that Anglo American’s Cape Shangrila, originally destined for Bahrain, has now been redirected to Singapore; Cape Jasmine, also previously headed for Bahrain, has changed course to Vietnam; Mineral Zimbabwe has altered its destination from Oman to countries in Asia. Vale’s two cargo ships, originally bound for Oman, have also been rerouted to Malaysia and other countries. Additionally, according to Kpler, other ships have been forced to remain stationary off the coast of the Arabian Gulf, unable to continue their journey for now.

The Strait of Hormuz is one of the world’s most important shipping passageways. After the US and Israel attacked Iran, Iran responded by attacking transiting vessels, nearly causing total disruption of maritime traffic through the strait. Meanwhile, the war has pushed up freight and fuel costs, raising cargo arrival prices even further.

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

David Cachot, Research Director at Wood Mackenzie, warned, "Current geopolitical turmoil exposes the obvious vulnerability of this already highly concentrated supply chain." He said that if the flow of pellets or pellet exports is disrupted, the impact will "quickly spread to" the entire DRI industry.

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