Trump’s fragile ex-China mineral-alliance plan faces cost surge amid Iran war oil shock

An oil-supply shock caused by the US-Israel conflict with Iran is complicating US President Donald Trump’s already fragile mineral-alliance strategy, analysts said, given the acute vulnerability of energy-intensive rare earth refining and critical metal supply chains to such disruption.

Oil and gas are essential for the critical mineral industry, according to analysts. Hydrometallurgical extraction for rare earth elements and other metals, such as nickel and cobalt, relies on a suite of chemical reagents and solvents that are either directly derived from petrochemicals or produced through energy-intensive processes linked to hydrocarbons.

“Any sustained oil shock makes the economic case for non-Chinese processing capacity significantly harder to build,” said Genevieve Donnellon-May, a fellow at the Pacific Forum and an associate fellow at the Institute for Security and Development Policy.

Trump’s strategy of forming processing partnerships with Australia, Japan, Canada and others relies on the premise of reliable, cost-competitive energy inputs for smelting, refining and chemical processing, she noted. “An oil-supply shock attacks that premise directly.”

Vivek Y. Kelkar, an independent analyst based in India, said that the Iran conflict complicates Trump’s critical-minerals alliance strategy but does not “completely sabotage” it, with the deeper US strategic logic being to reduce dependence on China.

“In the short term, there could be pressure from the Iran war, but over the long term, there could be strategic reinforcement against trade weaponisation,” he added.

Since chokepoints and concentrated supply chains are vulnerabilities that can be weaponised, Kelkar explained, the US and other policymakers could veer towards “friendshoring” – with processing done across regions that are viewed as less of a political risk.