The Strait of Hormuz and the Tungsten Bottleneck
According to OilPrice.com on April 2, 2026, 20% of global oil exports were blocked by the Strait of Hormuz. This disruption triggered a supply crisis for critical materials, including tungsten, which is essential for the production of weapons and high-intensity military systems. The blockade, caused by joint military operations between the United States and Israel, disrupted oil and petroleum product flows, forcing Asian countries to reduce refining rates and limit exports to preserve domestic stockpiles. This created a domino effect on secondary markets, particularly those related to strategic materials.
This highlights the United States’ dependence on foreign tungsten. Domestic reserves of this metal, already limited, are rapidly dwindling due to increased military demand and reduced imports. The conflict has accelerated the urgency of strengthening the domestic supply chain, highlighting a systemic vulnerability that goes beyond mere geological availability. The operational mechanism is clear: war disrupts logistical flows, which in turn creates tensions in the markets for critical raw materials.
The Operational Mechanism of Tungsten
Tungsten is a critical material for the production of weapons, missiles, and air defense systems, thanks to its high density and heat resistance. Its supply depends largely on foreign suppliers, particularly China and countries in the Far East. The blockade of the Strait of Hormuz disrupted the oil flows that fuel the production chains of these materials, causing a partial collapse in logistical flows. The effect was amplified by the reduction in refining capacity in Asia, which reduced the availability of intermediate products for the military industry.
The operational mechanism consists of three phases: first, the disruption of the Strait of Hormuz reduces the flow of oil; second, the reduction in refining in Asia limits the production of intermediate materials; third, the increasing military demand in the United States and Europe drives tungsten prices to record levels. The price of tungsten reached a record high, according to RocksandStocks.news, due to increased demand and reduced supply. This forced the U.S. Department of Defense to invest in domestic projects, such as the Pilot Mountain project in Nevada and the Mactung site in the Yukon, to reduce foreign dependence.
Who Pays and Who Benefits
Weapon and military system manufacturers in the United States are facing a significant increase in costs. Companies that rely on imported tungsten, such as Fireweed Metals Corp. and Golden Metal Resources, have seen their margins reduced due to increased demand and reduced supply. Conversely, companies operating in sectors related to the domestic production of critical materials are benefiting. Funding of $6.2 million from the Department of Defense for the Pilot Mountain project and $15.8 million for Mactung has allowed these companies to accelerate the development of their projects, increasing their competitiveness.
The consequences also extend to financial markets. The shares of Atlas Lithium and First Majestic Silver have risen due to the increased demand for critical metals, while those of Tesla have fallen due to the reduced demand for electric vehicles. The systemic cost has been transferred to companies that have not been able to adapt quickly to the new scenarios. Countries that depend on oil exports, such as Indonesia and Malaysia, are facing a reduction in revenue, while countries that have increased domestic production of critical materials are gaining competitiveness.
Conclusion
The conflict in Iran has exposed a structural dependence of the United States on foreign tungsten, with domestic reserves at risk of depletion. The war has disrupted logistical flows, creating a collapse in the markets for critical raw materials. The operational mechanism is clear: war disrupts flows, which in turn creates tensions in the markets for raw materials. The systemic costs have been transferred to companies that have not been able to adapt quickly to the new scenarios. The two indicators to monitor in the coming months are the port traffic in the Strait of Hormuz and the price of tungsten. If traffic remains blocked and the price of tungsten remains high, the risk of a supply crisis will intensify. The infrastructural cost will be borne by companies that have not been able to adapt quickly to the new scenarios.
Photo by Dominik Lückmann on Unsplash
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