Hello, Reader.

In 1564, the teenaged King Charles IX moved New Year’s Day from the spring equinox to January 1. What followed was basically a 16th-century communication disaster.

Those who didn’t get the news, or were slow to adapt, were labeled “April fools”.

One royal decree began centuries of pranks.

This calendar confusion is just one working theory for the origins of today’s mischief-filled holiday. But it serves as a timely reminder: Change is messy, and it is easy to fall behind.

We see this playing out with the U.S.-Iran conflict.

Oil prices are hovering around $100 per barrel and are expected to remain high, driven by intense volatility, geopolitical risks, and fears of a prolonged supply shock. The Strait of Hormuz, a key oil shipping route, remains closed to most shipping traffic. And analysts at Wood MacKenzie are warning oil could rocket to more than $200 a barrel.

This is the new normal. Oil prices are not merely high, they are thrashing around wildly from day-to-day. But even though oil is grabbing most of the headlines, it is not the only commodity under the thumb of the Iran conflict.

It turns out that when a butterfly flaps its wings in the Straight of Hormuz, a tsunami of chaos sweeps over nearly every commodity industry in the world.

Today, I’d like to focus on another major global commodity – aluminum – and how to position your portfolio before this growing ripple effect turns into a full-blown supply shock.

Let’s dive in…

When Oil Moves, Aluminum Follows

Like oil, aluminum prices have swung wildly since the U.S. launched its first attacks on Iran in February. That’s because the war is causing a double-whammy for the aluminum market.

First, it is directly eliminating most of the Middle East supply, which accounts for about 10% of the world total. Second, it is driving the price of energy much higher. That’s bad news for aluminum production, which requires huge volumes of electricity.

By definition, therefore, an energy shock is an aluminum shock.

We saw this scenario play out in the 1970s, when oil prices surged due to geopolitical conflict and embargoes. Electricity costs jumped globally, and aluminum smelters become costly to run.

As a result, high-cost regions, like the U.S., Western Europe, and Japan curtailed aluminum production. Predictably, supply tightened… and prices rose.

Now, higher prices can be a tailwind for aluminum companies. When prices go up, producers sell aluminum at increased prices. In turn, their revenues and profits can climb.

But there’s a catch.

If aluminum prices rise because energy costs are also rising, then costs are going up at the same time as aluminum prices, and profit margins may not improve much.

That means that the real aluminum winners will be those with cost advantages – like access to cheap electricity or stable energy, especially hydro and nuclear power.

These companies will benefit from rising aluminum prices without much of their own costs rising.

Alcoa Corp. (AA) is better positioned than many other aluminum producers. The company has been preparing for this moment for decades, literally.

Alcoa’s Structural Advantage

Alcoa is not just the largest American aluminum producer; it is also among the world’s most environmentally progressive.

As I mentioned, producing aluminum requires immense amounts of electricity, and that energy intensity is reshaping the industry. Increasingly, companies such as Tesla Inc. (TSLA) are seeking to source their aluminum from clean-energy smelters powered by hydro, nuclear, or renewables. That shift is elevating low-carbon producers like Alcoa to the top tier of the aluminum world.

Today, renewable energy powers roughly 87% of Alcoa’s smelting operations. This alignment with the global push toward decarbonization gives the company a durable strategic advantage, and positions it not merely as a cleaner metal producer.

After suffering a tariff-induced selloff in early 2025, Alcoa’s shares have been trending higher. And since the butterfly flapped its wings in the Middle East, the company has soared on aluminum supply concerns.

This past weekend, Iran attacked two of the region’s producers. Emirates Global Aluminium, the area’s top aluminum supplier, said it sustained “significant damage” at its Abu Dhabi site. Aluminium Bahrain, the second target, is examining the damage at its own facility.

Meanwhile, Alcoa’s smelters continue humming along and churning out aluminum.

Beyond a conflict-related rally, I expect Alcoa’s uptrend to gain momentum – driven not only by firmer aluminum prices, but also by the company’s exceptional fundamentals. The company beat Wall Street’s expectations for the fourth quarter 2025, and is expected to release its next quarterly report on April 16.

Alcoa currently trades for less than 12 times estimated 2026 earnings – well below its historical forward multiple of roughly 20 times earnings. So, although the shares of this leading aluminum producer are climbing higher, they are still relatively “cheap” compared to estimated earnings… and I should point that Wall Street has been busily raising its estimates for this year.

Alcoa is one of the several commodity-related companies I recommend in Fry’s Investment Report.

To stay up-to-date on the aluminum producer – and learn more about my other recommendations – join me at Fry’s Investment Report.

As a member, you’ll get access to all of my latest research, reports, and trade alerts. (There is no chance of becoming an unsuspecting “April fool” here.)

The bottom line is that commodity markets, like aluminum, are excruciatingly capital intensive, requiring years, long or decades, long lead times, and do not often immediately reward those spectacular investments.

But inevitably, a shock of some kind arrives, either due to simple supply demand factors, tariffs, wars, or acts of God.

When those moments arrive, commodity-focused companies ring the register in a big way.

The aluminum market has arrived at such a moment. 

Click here to join me at Fry’s Investment Report today.

Regards,

Eric Fry