Trade Tensions and Supply Shocks Reshape Commodity Market

Oil and Metals Slide as Tariff Policies Disrupt Global Demand

Commodity markets are experiencing sharp shifts in April 2025 as trade tensions between the U.S. and China ripple through global supply chains. One of the most affected sectors is energy. The Organization of the Petroleum Exporting Countries (OPEC) recently downgraded its oil demand growth forecast for both 2025 and 2026, citing weakening economic conditions triggered by escalating U.S. tariffs.

Brent crude is now expected to average $63 per barrel in 2025, sliding further to $58 in 2026, according to a new outlook from Goldman Sachs. The investment bank notes that increased supply from OPEC+ nations, combined with fears of a global recession, is applying significant downward pressure on oil prices. (Reuters)

Meanwhile, industrial metals are under pressure from aggressive U.S. tariff expansions. Washington has eliminated exemptions and increased tariffs on steel and aluminum by 25%, impacting not only raw materials but also downstream sectors. These changes are expected to raise the energy and clean power industry’s annual tariff burden from $400 million to an estimated $53 billion. This surge in costs threatens to delay key infrastructure projects, particularly in the renewable energy sector. (Reuters)

Gold and Agriculture Defy Downtrend with Bullish Momentum

While energy and metals falter, precious metals are surging. Gold reached a historic peak of $3,245.42 per ounce this week, fueled by investor anxiety over policy uncertainty and a potential global slowdown. Analysts expect the rally to continue, with some forecasting a climb toward $3,400 later this year if economic conditions deteriorate further. (MarketWatch)

The appetite for safe-haven assets is being driven by mixed economic signals, including sluggish demand forecasts, volatile stock markets, and weaker global trade. With geopolitical risk and inflation concerns mounting, gold remains an attractive option for hedging against uncertainty.

In agricultural markets, commodities show a mixed bag. Grains such as soybeans, wheat, and corn are trading lower due to ample global supply. However, soft commodities like cocoa and coffee are outperforming, driven by poor weather conditions in key producing regions including West Africa and Brazil. These supply disruptions have triggered price spikes and made them standout performers in an otherwise turbulent commodities landscape.

As April unfolds, commodity markets remain in flux, shaped by the intersection of politics, policy, and production dynamics. Investors are advised to tread carefully, as headlines and tariffs—not just supply and demand—now steer the direction of this complex sector.