The Iran war has generated one energy story everyone is watching and one that almost nobody is. The story receiving attention is oil. The story receiving almost no attention is sulfur, and it is a consequential one as nations consider their long-term strategies for energy security and emissions reductions.
The argument here is specific: Sulfuric acid, which is made from elemental sulfur, is an irreplaceable input in the manufacture of renewable energy materials, such as silicon wafers in solar panels; the nickel, cobalt, and rare earths in wind turbine magnets and electric vehicle (EV) motors; and the copper wiring in every grid connection and transformer. Without sulfuric acid, none of these components get built. The Middle East accounts for roughly 24 percent of global sulfur production and approximately 50 percent of global seaborne sulfur trade, all of which transits the Strait of Hormuz. Sulfur prices have already risen more than 70 percent since the conflict began.
The dependency runs deepest in hydrometallurgy. Indonesia’s nickel high-pressure acid leaching (HPAL) operations, which supply battery-grade nickel for EV cathodes, are roughly 75 percent sulfur dependent. Copper and cobalt leaching operations in the Democratic Republic of the Congo (DRC) are 50 to 60 percent reliant on imported sulfuric acid. Lithium extraction from spodumene requires acid roasting to produce battery-grade output.
The United States, Iran, and Israel have declared a ceasefire, but even if shipping returns to pre-war levels, the temporary halt in sulfur shipping through the strait provides a cautionary tale, particularly for countries with ambitious plans to ramp up renewables in their energy systems.
A weak link in the energy transition
Sulfur supply has a structural ceiling that the energy transition has not yet confronted. Sulfur’s supply is determined by how much oil and gas the world processes, not by sulfur’s own price or demand. Elemental sulfur reaches the market through three pathways: recovery as a byproduct of oil refining and natural gas processing, which accounts for over 90 percent of global supply at near-zero marginal cost; direct extraction from native sulfur deposits through processes such as Frasch mining; and recovery as a byproduct of nonferrous metal smelting. The latter two exist but cannot substitute for refinery-derived supply at transition-relevant volumes or prices. Alternative leaching chemistries are under development for select applications, but none can be deployed at the volumes or cost points required to substitute for sulfuric acid within any disruption-relevant timeframe. Global oil and gas refining capacity is expected to peak after 2035 and begin falling, taking sulfur supply down with it. One study has projected a sulfur shortfall of between 100 and 320 million metric tons annually by 2040, depending on how quickly decarbonization proceeds. The faster the world transitions away from oil, the less sulfur the transition has to work with.
The Hormuz crisis has made this potential pain point immediate and measurable. The sulfur price to Indonesia rose from $101 per metric ton in July 2024 to $554 per metric ton by January 2026 as HPAL expansion drove demand, a 440 percent increase before the Iran conflict added further pressure. The Iran conflict layered a further shock on top of that, with the Abu Dhabi National Oil Company setting its April official selling price at $600 per metric ton, up $70 from March, and Indonesian nickel mixed hydroxide precipitate producers halting long-term contract offers while they assess supply risk. S&P Global has warned that the nickel market will begin pricing in supply chain risk premiums tied to sulfur inputs in addition to ore availability. The financial effect on the transition is direct: higher sulfur costs raise processing costs for battery-grade nickel and lithium chemicals, which raise costs for EV battery packs and grid storage cells. Meanwhile, elevated liquefied natural gas and sulfur costs in Asia are squeezing the lithium chemical converters in China, which handle roughly 80 percent of global lithium refining capacity. When input costs rise across the battery metals processing chain simultaneously, the energy transition does not stop. It gets more expensive, projects get delayed, and more fossil fuel stays in the system longer than it otherwise would. This crisis could make it more difficult for countries to finance climate-related renewables expansion, while simultaneously strengthening the argument for accelerating that expansion to secure their energy futures.
What Hormuz has exposed is not a temporary shock, but a permanent vulnerability built into the energy transition’s own design. The transition created surging demand for sulfuric acid to manufacture its hardware, while simultaneously reducing the fossil fuel throughput that produces it as a byproduct, with demand projected to rise from 246 to 400 million metric tons by 2040, even as supply peaks and declines. Africa is absorbing the worst of it, with nearly all sulfur imported by southern African buyers last year originating in the Middle East, most of it destined for the DRC copper and cobalt operations that feed the global battery supply chain. The compounding problem is that sulfuric acid serves two transition-critical markets simultaneously: battery metals processing and phosphate fertilizer production. Metals sector consumers are already willing to outbid fertilizer producers for scarce supply because margins at current battery metal prices are higher. That competitive dynamic means a sustained sulfuric acid shortage does not merely slow solar and EV deployment; it also raises food production costs in the countries least able to absorb them. The energy transition and global food security are competing for the same chemical, through the same disrupted strait.
Plan now or pay more later
Two responses are available. The most immediate is strategic stockpiling. Elemental sulfur, unlike helium, is physically storable; block storage has been demonstrated safely at large scale in Kazakhstan and Canada. However, converting stored sulfur to acid still requires functioning acid plants near the point of need, meaning reserves solve a feedstock problem, not a processing one. What’s more, sulfuric acid cannot be stockpiled at industrial scale due to its corrosivity, containment requirements, and tendency to degrade, making elemental sulfur the only practical reserve option. The International Energy Agency maintains strategic petroleum reserves; there is no equivalent for elemental sulfur, despite their equivalent structural importance to the energy transition.
To remedy this gap, the countries most directly impacted by a sulfur shortage could implement a joint storage strategy. These would include Indonesia, the world’s largest nickel producer and most directly exposed to disruptions in processing battery metals due to its dependence on Gulf-supplied sulfur, along with China as the dominant buyer of Indonesian processed nickel, Japan as a major importer of Indonesian nickel matte for further refining into battery-grade materials, and South Korea as a buyer of both Indonesian nickel intermediates and the finished battery cells produced from them. These countries could create a minimum ninety-day reserve of elemental sulfur modeled on oil reserve architecture, whether through a formal multilateral framework or parallel national commitments.
The medium-term response is harder because the geopolitics of sulfur supply do not map cleanly onto allied frameworks. The major alternative producers are Canada and the United States; the major buyers needing alternatives are Indonesia, India, and sub-Saharan Africa, a mix of strategic partners and nonaligned states that does not map onto a single allied framework. Captive sulfuric acid production at copper smelting operations, where acid is generated as a byproduct of processing sulfide ores, already insulates facilities like Ivanhoe’s Kamoa-Kakula complex in the DRC from import dependency. Scaling this model, through investment in on-site acid plants at HPAL facilities and bilateral sulfur offtake agreements between Canadian producers and Indonesian processors that are commercially structured rather than geopolitically mediated, is where the US International Development Finance Corporation and Export-Import Bank belong: Financing the logistics infrastructure and on-site acid capacity that the market will underprice until the next disruption makes the cost of inaction impossible to ignore. The logistics network for moving sulfuric acid at scale on alternative routes does not currently exist, and colocating acid plants at HPAL facilities permanently changes an operation’s cost structure in ways that private operators will not absorb alone.
The energy transition built its manufacturing supply chains on a chemical produced as waste from the industry it is competing with. The Hormuz crisis has made the cost visible: higher input prices across the battery metals supply chain, delayed project commitments, and a transition that slows down and gets more expensive the longer vessel operators fear transiting the strait. The long-run version of the same problem arrives as fossil fuel throughput declines in the future. The only question is whether governments pay now through strategic investment or later through disruption. Waiting is itself a choice, and it is the more expensive one.
Alvin Camba is lead scientist and director of research at Lyvi. He is also a nonresident fellow in the Indo-Pacific Security Initiative at the Atlantic Council’s Scowcroft Center for Strategy and Security, and a senior research fellow at the Associated Universities, Inc. His book on Chinese megaprojects and coalition politics in Southeast Asia is in production at Cornell University Press.
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Image: Sulfur transport (Anthony Maw, Unsplash, https://unsplash.com/photos/a-large-boat-docked-at-a-dock-with-a-mountain-in-the-background-uXsg4L71n3U)