(Adds analyst comment and dateline, updates prices)

By Eric Onstad

LONDON, March 20 (Reuters) - Aluminium prices steadied

on Friday as investors balanced the competing impacts of the

Iran war and lower supply from disrupted operations in the

Middle East against weaker demand from a spike in oil prices.

Benchmark three-month aluminium on the London Metal

Exchange was up 0.5% at $3,269 a metric ton by 1030 GMT, having

closed down 4.4% in the previous session after sliding as much

as 8.4% as speculators scrambled to liquidate positions.

"The tone in base metals is cautious after yesterday's

session that left aluminium at the centre of attention," said

Neil Welsh, head of metals at broker Britannia Global Markets.

Aluminium prices had rallied in recent weeks on fears of supply

disruptions after the U.S. and Israel attacked Iran. The Gulf

accounts for 8% of global production.

Aluminium Bahrain said on Thursday it is exporting

metal via the Saudi port of Jeddah as the Strait of Hormuz

remains effectively shut.

High oil prices, however, spur inflation, erode global economic

growth and dampen metals demand.

"That combination has traders balancing the risk of regional

supply disruption against the risk that higher energy prices

will slow manufacturing demand," Welsh added.

Metal prices briefly got support on Friday when oil eased

during Asian trading on Western efforts to secure safe passage

through the Strait of Hormuz, but oil later recovered, eroding

that buffer.

LME copper was slightly firmer in Asian trading, but

later went into the red, giving up 0.3% to $12,115 a ton. It was

headed for a 5.5% weekly loss, the biggest since April 2025.

The most active copper contract on the Shanghai

Futures Exchange ended daytime trading 1.1% lower at 94,780 yuan

($13,751.18), down 6.1% for the week.

Among other metals, LME zinc rose 0.3% to $3,080 a

ton and lead gained 0.6% to $1,899.50 while nickel

shed 0.6% to $16,890 and tin dropped 2.4% to

$42,490.

($1 = 6.8925 Chinese yuan renminbi)