Combined with Iran effectively shutting down the Strait of Hormuz, this could lead to major price hikes. Goldman Sachs estimates that one month of full production loss from the Middle East would temporarily push aluminum to $3,600 per ton, which would set record highs. Around 9% of global aluminum originates from the Gulf. 

Robert Atwell, director of operations at metal fabricator Ernest D. Menold and a member of the Sheet Metal and Air Conditioning Contractors’ National Association’s HVAC Steering Committee, said there is a concern that prices will increase. Factors like tightened shipping routes will cause supply chain disruptions, leading to scarcity and additional insurance requirements for shipping, all of which would raise aluminum prices. 

“We’re seeing shorter durations on pricing holds from suppliers, which increases the contractor’s risk for lump-sum work,” said Atwell. 

The spikes will compound with price hikes previously issued by manufacturers. Pac-Clad Petersen implemented adjustments that took effect March 16, including a 10% increase on aluminum accessories and 4% on sheets and coils.  

“We are changing the language on our proposals to clients. In some cases, our fabrication proposals are valid for 24 hours when it used to be 30 days,” said Atwell. “We have line-item raw material costs on some proposals that have a larger percentage of raw materials, so that we could identify the cost increase if the client approved the work after the 24-hour windows.” 

The producer price indexes for aluminum mill shapes and steel mill products jumped by 39.1% and 20.9%, respectively, from February 2025 to February 2026, the largest year-over-year increases since the supply-chain disruptions of early 2022, according to the Associated General Contractors Association. 

Construction input prices surged in February, according to the Associated Builders and Contractors, increasing 1.3% in residential and nonresidential sectors. Overall input prices are 3.1% higher than a year ago. 

The construction price increases are a result of a slowdown in nonresidential construction in combination with sharp increases in metal prices. U.S. tariffs on aluminum and steel are at 25%, while copper is at 50%. 

“Rising construction costs and uncertainty over the impact of tariffs, war in the Middle East, and a slowing economy are leading to slowdowns and cancellations of many project types,” said Ken Simonson, AGCA’s chief economist. “Aside from investment in data centers and residential improvements, other private construction categories have been slumping for the past year.” 

Atwell’s advice for HVAC contractors on softening the blow is to plan and pre-purchase materials, especially if their suppliers work with temporary storage. He also suggests shortening the terms for acceptance of proposals and reviewing contracts with clients for any language about material escalation. 

“Consider adding language related to cost escalation to your proposals and line-item material values to be as transparent as possible with your customer,” he said. 

Effects on Fuel and Labor 

As a result of the Iran war, gas prices have risen after Iran effectively shut down the Strait of Hormuz. In addition to increases at the gas pump, heating oil prices rose to their highest points since 2022.  

The Organization for Economic Co-operation and Development forecasts U.S. inflation will hit 4.2% in 2026, which is double the target. The estimate before the war was 2.8%. The OECD attributes these inflation increases to both the war and U.S. tariffs, despite the Supreme Court striking down certain emergency tariffs. 

“The breadth and duration of the conflict are very uncertain, but a prolonged period of higher energy prices will add markedly to business costs and raise consumer price inflation, with adverse consequences for growth,” the OECD said in its March 2026 interim report. 

As a result of these economic shifts, labor is likely to take a hit. The Associated Builders and Contractors’ analysis of the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey shows the construction industry had 202,000 job openings as of the end of February, falling to its lowest rate on record. They rebounded in March when the construction industry added 26,000 jobs, and grew on a year-over-year basis by 0.7%.

“The March jobs data do not capture the detrimental ways in which the conflict in Iran will continue to affect the construction industry,” said ABC Chief Economist Anirban Basu. “Oil prices have risen to heights not seen since 2022 and diesel prices have soared to $5.40 per gallon, up more than $1.90 per gallon from the start of 2026. At the same time, higher treasury yields have put renewed pressure on borrowing costs.

"While contractors were relatively optimistic about the near-term outlook as of February, according to ABC’s Construction Confidence Index, it remains to be seen how long that optimism can persist under current economic conditions.”

The Federal Open Market Committee’s projections, issued March 18, show the unemployment rate remaining at 4.4. In a statement, the committee noted that job gains have remained low, and “the implications of developments in the Middle East for the U.S. economy are uncertain.”