Could the Middle East conflict help Australia catch up in green iron? in Commodity News 01/05/2026 The Middle East has established itself as a major potential hub for the production and export of lower-emissions iron to steelmakers in Europe and Asia, with its steel industries long dominated by direct reduced iron (DRI) technology. However, the ongoing conflict in the region may shift the landscape in favour of other emerging competitors in this market – including Australia. The region’s steelmaking plants have already been significantly affected, particularly in Iran, where several major facilities have reportedly suffered severe damage and may be unable to sustain crude steel production for an extended period. As a result, the global steel industry may have already lost part of its potential lower-emissions capacity, as the affected assets are based on lower-emissions DRI-EAF [electric arc furnace] technology. The ripple effects of the Strait of Hormuz closure are now becoming more evident across the Middle East. These include disruptions to value chains, higher transportation and insurance costs, shipping uncertainties, shortages of direct reduction-grade pellet and consequently DRI supply constraints. This has also contributed to rising scrap prices, as steel producers attempt to maintain output by increasing scrap charging. Two major pellet producers in Bahrain and Oman are now facing challenges in sourcing iron ore concentrate, primarily from Brazil, and are unable to reliably supply DRI facilities in the region. Vessels originally destined for these two producers have been diverted to alternative ports across Asia. The semi-finished steel market has also been significantly impacted, as Iran – accounting for roughly 11% of global semi-finished steel trade – has effectively been taken out of the market. While many reports highlight the prolonged recovery timeline for the Middle East’s oil and gas export facilities, the outlook for other commodities – including iron and steel – appears to be similar. Steelmakers in Europe and Asia may now think twice about becoming dependent on imports of low-carbon iron from within the Straits of Hormuz. Uncertainty hits low-emissions projects This situation is creating a high level of uncertainty for investors, driving inflation, disrupting supply chains, pushing fuel and energy prices sharply higher across all regions, and increasing risk in financial markets. These geopolitical uncertainties, even if they do not lead to project cancellations, could slow the region’s steel decarbonisation and delay new DRI investments. All of the new low-emissions plants announced in Saudi Arabia were to be built in the Ras Al-Khair industrial zone and port, located on the Persian Gulf, which is now fully blocked. This includes projects from Essar Group; Vale’s Mega Hub; Aramco, Baosteel and PIF; and Tosyali’s flat steel complex. Japanese companies – Itochu and JFE – were also considering the establishment of a DRI facility in Abu Dhabi, UAE. Apart from Saudi Arabia, Vale’s Mega Hub concept also includes potential developments in the UAE and Oman. Among the low-emissions iron and steel projects announced in the region, those in Oman appear to be less affected. Meranti Green Steel has stated that the conflict will not delay its decision or construction timeline, and it is also considering future expansion. Jindal Steel is continuing to build a hot-briquetted iron (HBI) plan with a capacity of 2.5 million tonnes pe