^{Photo: The Edge Malaysia}

The global auto industry is facing a new supply chain challenge as the ongoing war in Iran threatens critical materials. While the region does not manufacture auto parts on a large scale, it is a significant source of oil, aluminum, and petrochemical derivatives used in automotive production. These disruptions come at a time when automakers are navigating massive investments in electric vehicles, new software systems, and trade-related tariffs.

Oil and Energy Pressures

Approximately 20% of the world’s oil passes through the Strait of Hormuz, a narrow corridor between Iran and Oman, making it a crucial shipping route. The conflict has pushed Brent crude prices above $100 per barrel, driving gas prices higher for consumers. In Iowa, for example, gasoline now exceeds $3 per gallon, with nationwide increases of 12 cents per gallon occurring twice in the past two weeks—among the largest single-day spikes since 2005.

Higher oil prices also push up the cost of diesel and jet fuel, impacting freight and shipping costs. Petrochemicals derived from crude—such as ethylene and propylene, essential for plastics—are similarly affected. Around 30% of a vehicle’s components are plastic, making these price hikes a significant concern for car manufacturers.

Aluminum and Lightweighting Challenges

Aluminum, another key material for automotive manufacturing, is heavily sourced from the Gulf region, particularly Bahrain and the United Arab Emirates. These countries account for roughly 9% of global aluminum smelting, and the U.S. imports about 20% of its aluminum from this region. Lightweight metals like aluminum are critical for improving fuel efficiency and offsetting the weight of batteries in electric vehicles and hybrids, making any disruption especially impactful.

Broader Supply Chain Vulnerabilities

The Iran war adds to a growing list of supply chain challenges that have hit the auto industry in recent years. The COVID-19 pandemic caused raw material shortages and microchip deficits, while the Ukraine conflict disrupted supply of wire harnesses. More recently, geopolitical tensions with semiconductor manufacturers like Netherlands-based Nexperia have triggered further constraints, exposing the fragility of global supply networks.

Experts emphasize that while oil prices may stabilize as other producers ramp up output, the auto industry is now navigating a pattern of repeated shortages with no clear playbook. According to Dan Hearsch, managing director at AlixPartners, each disruption carries unique complexities, leaving automakers constantly adapting rather than following a predictable cycle.

Strategic Implications for Automakers

Automakers are balancing these supply pressures alongside billions in tariffs and ongoing transitions toward electric vehicles and integrated vehicle software systems. The combination of high material costs, shipping disruptions, and geopolitical instability is stretching resources at a critical moment for the industry.

“Since Covid, some very fundamental aspects of supply chains seem to have broken,” Hearsch said. “There’s no silver bullet for predicting or managing all these crises, because each disruption is unique. Companies have to remain agile and resilient to survive in this environment.”

The Iran conflict is thus more than a regional issue—it is a global stress test for the automotive supply chain, affecting pricing, production timelines, and the industry’s broader transition toward sustainable, technology-driven vehicles.