Global commodity markets remain highly volatile following the effective closure of the Strait of Hormuz since late February 2026, with energy prices elevated despite recent pullbacks on diplomatic hopes. The strait has been effectively closed to shipping traffic, disrupting nearly 20% of global oil supply that previously flowed through this chokepoint. Supply chain disruptions continue to ripple through metals and agricultural markets, while emerging market importers face mounting fiscal pressures.
TL;DR
- Brent crude eased to $102/bbl, WTI near $105/bbl on Iran sanction waiver reports
- Middle East shut-ins at 10.5 million b/d in April amid Hormuz closure
- Aluminum surged to $3,676/tonne, +45% YoY on Gulf supply disruptions
- Wheat rose to $6.64/bu, up 25.6% YoY on tight US supply forecast
- Sugar deficit revised to 4.30 MMT for 2026/27 on elevated oil prices
Energy Markets: Diplomatic Hopes Counter Supply Constraints
Brent crude futures eased toward $102 on Monday, after rising above $111 per barrel earlier in the session after Iranian media reported that the US had proposed a temporary waiver on oil sanctions. WTI crude futures eased toward $105 per barrel on Monday after briefly climbing above $108 earlier in the session.
The volatility reflects conflicting signals from ongoing Iran negotiations. Tehran may be willing to a long-term nuclear freeze agreement, though not a full dismantling of its atomic program, reportedly seeking a gradual peace arrangement with the US and Israel and wants its enriched uranium transferred to Russia rather than the US. However, geopolitical tensions in the Middle East remain elevated, with the Strait of Hormuz largely closed and the Trump administration maintaining its blockade of Iranian ports.
Over the weekend, energy infrastructure across the Persian Gulf came under attack, including a nuclear facility in the United Arab Emirates, adding to concerns over regional stability and potential supply disruptions.
The Brent crude oil spot price averaged $117 per barrel (b) in April, $46/b higher than the average in February. This monthly average price is also the highest since June 2022, following Russia's invasion of Ukraine. Daily Brent spot prices reached as high as $138/b on April 7.
The International Energy Agency warned on Monday that global oil inventories are declining rapidly, while the strait will remain effectively closed through late May, with flows slowly starting to resume in late May or early June. Even after flows resume, we expect it will take until late 2026 or early 2027 for most pre-conflict production and trade patterns to resume.
Natural Gas: Natural gas fell to 3.02 USD/MMBtu on May 19, 2026, down 0.02% from the previous day. US natural gas futures hovered around 3.02 per MMBtu, near a seven-week high, amid hotter weather forecasts and falling output. High temperatures are expected across much of the southern and eastern US through midweek, potentially boosting gas demand from electricity providers to meet increased cooling needs.
On the supply side, production continued to decline, as some energy companies, such as EQT, curtailed output in response to persistently weak spot prices. Meanwhile, flows to major US export facilities eased from a monthly record of 18.8 bcfd in April to around 17.0 bcfd so far in May, amid seasonal maintenance at plants including Golden Pass and Freeport LNG.
Global LNG prices remain elevated as a result of reduced flows through the Strait of Hormuz, with a wide spread between U.S. domestic natural gas prices and international markets.
Metals: Aluminum Surges, Copper Volatile on Supply Shock
Aluminum: Aluminum increased to 3676.00 USD/T, the highest since March 2022. Over the past 4 weeks, Aluminum gained 2.2%, and in the last 12 months, it increased 45.16%.
Aluminum futures in the UK held above $3,550 per tonne, hovering near a more than four-year high amid prolonged supply disruptions from the Middle East. The US and Iran exchanged threats and extended their impasse that has halted the flows of commercial vessels in the Persian Gulf. Pre-war supply from Gulf countries were responsible for 9% of global supply and nearly 25% of non-Chinese supply. On top of that, direct attacks on the largest refiners in the region delayed the eventual return of supply from the area, with EGA's flagship plant expected to return to capacity in one year, and Bahrain's ALBA operations being suspended.
Meanwhile, strong manufacturing activity data from China supported the demand backdrop. This was magnified by ample borrowing of special bonds in recent municipal debt auctions for their largest cities, which are commonly used for aluminum-intense infrastructure development.
Copper: Copper prices have experienced significant volatility. Markets have risen nearly $1.00 per pound in just two weeks, creating one of the strongest rallies the industry has seen in years. Many scrap yards are still trying to catch up to replacement costs, and sellers may continue to see rapid pricing changes throughout the week.
There are several factors driving this historic copper move beyond long-term AI infrastructure and electrification demand. Ongoing geopolitical tensions and concerns about chemicals used in copper refining have heightened supply chain fears, helping push prices sharply higher over the last two weeks.
Agricultural Markets: Divergent Fundamentals
Wheat: Wheat rose to 664.50 USd/Bu on May 18, 2026, up 4.52% from the previous day. Over the past month, Wheat's price has risen 11.31%, and is up 25.61% compared to the same time last year.
Wheat futures hovered around $6.60 per bushel, holding near their highest level since June 2024 after US government forecasts signaled a tighter supply outlook for the upcoming season. The USDA projected all wheat production at 1,561 million bushels, down 424 million from last year due to lower acreage and weaker yields. The first survey based estimate for 2026 to 2027 winter wheat output also showed a sharp drop of 25%, driven mainly by reduced Hard Red Winter production.
The first survey-based production forecast for 2026/27 winter wheat is down 25 percent from last year to 1,048 million bushels, primarily on sharply reduced Hard Red Winter production. The projected 2026/27 season-average farm price is $6.50 per bushel, up $1.50 from last year on a lower stocks-to-use ratio and a higher projected U.S. corn price.
Corn: Corn futures rose above $4.70 per bushel, recovering some of the prior session's losses, as the US signaled potential large-scale Chinese purchases of American agricultural goods. US Trade Representative Jamieson Greer said China is expected to make "double-digit billion" annual purchases of US farm products over the next three years.
Corn futures jumped more than 3% to near $4.70 per bushel, recovering from a one-week low on May 15, as expectations for crop demand strengthened after long-awaited details emerged on China's commitment to purchase US agricultural goods. China pledged to buy at least $17 billion annually in US agricultural goods through 2028.
Meanwhile, the latest USDA outlook signaled ample US corn supplies extending into 2027, projecting production at around 16 billion bushels, still near record levels. Ending stocks were forecast at roughly 1.96 billion bushels, remaining comfortable despite a modest decline, while exports are expected to ease to about 3.15 billion bushels.
Coffee: Arabica coffee futures traded around $2.7 per pound, close to the lowest since November 2024, pressured by expectations of increased supply in the near-term. Traders closely monitor the incoming 2026/27 harvest in top producer Brazil. Weather conditions remain favorable in Brazilian producing areas, with predominantly dry weather and high temperatures, which is favoring the progress of the harvest and reducing risks to production at this time.
As production recovers—especially in Colombia, the world's second-largest Arabica producer—Arabica prices are projected to fall by 13 percent in 2026 and 5 percent in 2027, following a projected 50 percent increase in 2025.
Sugar: Sugar futures in the US rose to 15.4 US cents, moving back to a more than one-month high on expectations of reduced output.
For 2026/27, both beet and cane sugar production are expected to decline, with beet production pressured by reduced planted area and lower yields, and cane production affected by a winter freeze in Florida that damaged earlier plantings. Recently, Green Pool Commodity Specialists raised its estimate of the global sugar deficit for 2026/27 crop year from 1.66 million to 4.30 million tons, reflecting expectations of increased ethanol production amid persistently elevated oil prices.
Optimism over a potential US–Iran deal pushed crude oil prices lower, reducing incentives for mills to divert sugarcane into ethanol production and potentially increasing sugar supply.
Supply/Demand Balance & OPEC Response
OPEC has lowered its forecast for global oil demand growth in 2026, citing weaker consumption in advanced economies and signs of moderation in Asia, even as supply disruptions and price volatility continue to unsettle markets. In its Monthly Oil Market Report released Wednesday, the producer group said demand will rise by 1.2 million barrels per day (bpd) this year, down from 1.4 million bpd projected earlier, bringing total consumption to 106.3 million bpd.
Global oil demand growth in 2026 has been adjusted lower, reflecting weaker OECD consumption and a softer outlook in Asia. OPEC's latest assessment shows OECD demand nearly flat, with growth of just 100,000 bpd. Non‑OECD countries remain the main driver of growth, contributing 1.1 million bpd. China is expected to add 250,000 bpd, supported by petrochemical feedstock demand, while India is forecast to grow by 200,000 bpd, underpinned by strong vehicle sales and infrastructure activity.
Production shut-ins averaged 10.5 million barrels per day (b/d) in April, and we expect they will peak at nearly 10.8 million b/d in May as storage levels reach maximum limits requiring producers to shut in additional volumes. One of the factors driving our increased expectations of shut-in production is that we now forecast Iran will have to reduce production in part due to the U.S. blockade, which has curtailed Iran's ability to export oil.
Emerging Market Implications
The commodity crisis presents asymmetric risks for emerging markets. The war in the Middle East, the latest in a series of major shocks to the global economy following COVID-19 and Russia's invasion of Ukraine, could have significant macroeconomic repercussions. Prior to the conflict, Emerging Market and Developing Economies (EMDEs) were expected to grow by 4 percent in 2026; forecasts have since been revised down to 3.6 percent.
Pressures are concentrated in emerging market and developing economies, especially commodity importers with preexisting vulnerabilities. Energy-importing EMs face deteriorating current account balances, while commodity exporters confront fiscal constraints from volatile prices.
Commodity prices are forecast to decline another 7% in 2026, easing inflation for importers but tightening fiscal space for commodity-dependent sovereigns in Sub-Saharan Africa and Latin America. For investors, the risk is not volatility alone but asymmetric exposure between exporters and importers within the same asset class.
For metals, the impact of the conflict has been most pronounced for aluminum, given the region's key role in global supply, with prices projected to increase by about 22 percent in 2026. Together with strong gains in copper, this is expected to lift the price index by 17 percent in 2026, pushing it to a record high.
Key Data Points
| Metric | Value | Source | |--------|-------|--------| | Brent Crude | ~$102/bbl | Trading Economics (May 18) | | WTI Crude | ~$105/bbl | Trading Economics (May 18) | | Natural Gas (Henry Hub) | $3.02/MMBtu | Trading Economics (May 19) | | Aluminum | $3,676/tonne | Trading Economics (May 18) | | Wheat (CBOT) | $6.64/bu | Trading Economics (May 18) | | Corn | $4.77/bu | USDA/CBOT (May 18) | | Coffee (Arabica) | ~$2.74/lb | Trading Economics (May) | | Sugar #11 | ~15.4¢/lb | Trading Economics (May 18) | | Middle East Supply Shut-ins | 10.5 million b/d | EIA STEO (April) | | 2026/27 Winter Wheat Production | 1,048 million bu (-25% YoY) | USDA WASDE (May 12) |
FAQ
Q: When will the Strait of Hormuz reopen to normal traffic? A: The EIA assumes that the Strait of Hormuz will remain effectively closed through late May, with flows slowly starting to resume in late May or early June. Even after flows resume, it is expected to take until late 2026 or early 2027 for most pre-conflict production and trade patterns to resume. The situation remains highly dependent on US-Iran negotiations and regional security conditions.
Q: How are agricultural markets responding to the China trade deal? A: Corn futures jumped more than 3% to near $4.70 per bushel after China pledged to buy at least $17 billion annually in US agricultural goods through 2028. China is also pledging to buy 25 MMT of U.S. soybeans in 2026, 2027 and 2028. That raises some interesting questions, according to grain market analyst Bryce Knorr. For example, how will U.S. processors react? The deal provides demand support but raises questions about US domestic crushing capacity allocation.
Q: Which emerging markets face the greatest risk from elevated commodity prices? A: Energy-importing nations with high fiscal deficits face the most acute pressures. India is a clear example. Its structural position as one of the world's largest oil importers means that an energy supply shock and higher prices carry direct consequences for its import bill, current account balance, and domestic inflation trajectory. Other vulnerable EMs include net importers in Sub-Saharan Africa and South Asia with limited foreign exchange reserves and elevated debt levels.