Commodity Markets Overview Today: War-Driven Supply Shock Reshapes Energy, Metals and Agricultural Prices in 2026

Global commodity markets closed the month of May 2026 in a state of elevated tension and sharp price divergence, as a protracted conflict in the Middle East continued to strangle the Strait of Hormuz — the critical waterway that, before hostilities began, handled approximately 20% of the world's oil and liquefied natural gas supply. The International Energy Agency has described the cumulative impact as "the greatest threat to global energy security in history," and the data flowing in from across asset classes underscores that assessment.

Brent crude oil, the international benchmark, suffered its worst monthly performance since the Covid-19 pandemic in May, falling nearly 19% over the course of the month to trade at approximately $91.2 per barrel on Friday — the lowest level in roughly six weeks. The decline came as reports circulated that the United States and Iran had reached a preliminary agreement to extend a ceasefire by 60 days and potentially permit unrestricted shipping through the Strait of Hormuz, though President Donald Trump had not yet approved the proposed terms and Iranian state media said a deal had not been finalised. Despite the fall from peak levels, the international benchmark remains around one-third above its pre-conflict level from late February, when the war first erupted.

The scale of the supply disruption has been staggering. According to the U.S. Energy Information Administration's May Short-Term Energy Outlook, disrupted crude oil production in the Middle East averaged 10.5 million barrels per day in April and was expected to peak at nearly 10.8 million barrels per day in May. UBS estimated that observed global oil inventories dropped by a combined 246 million barrels in March and April, while cumulative production losses could exceed 1 billion barrels by the end of May — a level the bank described as leaving the market "strongly undersupplied." Even if shipping through the Strait is eventually restored, analysts at UBS warned that any recovery would be slow, with mines requiring clearing, damaged infrastructure needing repair, and shut-in production requiring time to restart.

Gold, the traditional safe-haven during periods of geopolitical turmoil, reached record highs in the first quarter of 2026 alongside platinum and silver, before retreating under the weight of persistent inflationary pressure and Federal Reserve hawkishness. Bullion was trading near $4,500 per ounce in late May, having faced selling pressure since late February as surging oil prices fuelled inflation concerns and reinforced expectations for tighter monetary policy. U.S. inflation data for April showed the fastest annual rise in three years, reinforcing market expectations that the Federal Reserve will keep interest rates unchanged well into 2027. The World Bank's precious metals price index is projected to surge 42% for the full year 2026, reflecting the safe-haven demand that dominated early in the year. For retail investors monitoring these volatile swings across multiple asset classes, multi-asset trading platforms such as eToro — which operates under FCA, CySEC and ASIC regulation — have seen heightened activity as users seek exposure to commodity-linked instruments.

Copper futures, meanwhile, remained resilient near $6.4 per pound, on track to register a second consecutive monthly advance. The red metal has been underpinned by a confluence of structural and cyclical demand drivers: strong enthusiasm around artificial intelligence infrastructure build-out, continued electrification of power networks, and the global energy transition. J.P. Morgan's head of Base and Precious Metals Strategy, Gregory Shearer, noted that global visible copper inventory now stands at nearly 1.5 million tons — an increase of 540,000 metric tons so far this year — but warned that if Brent oil were to remain around $110 per barrel, copper demand growth for 2026 could be stripped by 1.4 percentage points. On the supply side, production constraints in top producer Chile have forced major refiners to scale back capacity, while rising copper imports into the United States ahead of potential tariff measures added to concerns over tightening global availability.

Aluminum has been one of the most acutely affected metals. Futures rose to approximately $3,676 per tonne in mid-May — the highest level since March 2022 — as Gulf smelter operations were disrupted by the conflict. Pre-war supply from Gulf countries accounted for roughly 9% of global aluminum output and nearly 25% of non-Chinese supply. Direct attacks on major regional refiners, including EGA's flagship plant — which is not expected to return to full capacity for a year — and the suspension of Bahrain's ALBA operations compounded the tightness, while Guinea's announcement of controls on bauxite exports beginning in June added a further layer of upward pressure. The LME aluminum curve moved into backwardation, with cash contracts trading at a $60 premium to three-month futures — a clear signal of near-term physical tightness.

Natural gas and LNG markets bore some of the sharpest price moves of the entire commodity complex. The IEA reported that the disruption to Strait of Hormuz shipping since the start of March removed close to 20% of global LNG supply from the market, triggering sharp price increases across key importing regions. Global LNG production declined 8% year-on-year as Qatari and UAE exports collapsed. Damage to LNG liquefaction infrastructure in Qatar is set to delay the anticipated global LNG supply wave by at least two years, with the IEA estimating a cumulative supply loss of around 120 billion cubic metres between 2026 and 2030. In Bangladesh, spot LNG prices have jumped from $10–12 per MMBtu to $21–28 per MMBtu. Europe's TTF benchmark surged 59% in March alone, and in Europe natural gas demand fell by around 4% year-on-year in the same month, driven partly by fuel switching and demand-side policy measures. By contrast, U.S. domestic natural gas prices have remained broadly insulated due to infrastructure constraints on LNG export capacity, with the EIA forecasting Henry Hub to average around $3.50 per MMBtu in 2026.

Fertiliser markets have not been spared. The World Bank's fertiliser price index rose more than 12% in the first quarter of 2026, with monthly prices in March reaching their highest level since 2022. The closure of the Strait of Hormuz directly disrupted exports of urea, ammonia and phosphate — the IEA notes that more than 30% of global urea trade and roughly 20% of ammonia and phosphate trade transits the waterway. The World Bank projects fertiliser prices to rise more than 30% for the full year 2026. Critically, the knock-on impact on food security is becoming a growing concern, as higher transport costs and reduced fertiliser use threaten to raise domestic food inflation in vulnerable importing economies.

Outlook: The central scenario for global commodity markets hinges almost entirely on the pace and scope of any diplomatic resolution in the Middle East. The World Bank's April 2026 Commodity Markets Outlook forecasts overall commodity prices rising 16% for the full year — the first annual gain since 2022 — with energy up 24%, fertilisers up 31%, metals and minerals up 17%, and precious metals projected to surge 42% to record annual highs. Agricultural prices are expected to decline 6% on the year, as falling beverage prices more than offset modest food price gains. Bob Parker, senior advisor at the International Capital Markets Association, told CNBC that oil prices will likely remain in the $90–$100 range for at least the next couple of months until there is greater clarity on a lasting peace agreement — cautioning that even a partial reopening of the Strait would face "significant" infrastructure damage, security challenges and depleted inventories that would slow any normalisation. With stagflation risks rising and the Federal Reserve holding firm on rates, commodity markets are likely to remain a key barometer of geopolitical risk for the remainder of 2026.