Commodity Markets Experience Volatility Amid Geopolitical Tensions and Economic Shifts

Commodity Markets Experience Volatility Amid Geopolitical Tensions and Economic Shifts

As of June 26, 2025, commodity markets are exhibiting significant volatility, influenced by a combination of geopolitical tensions, economic policy changes, and shifting global demand patterns.

Energy Sector: Oil Prices Surge Amid Middle East Conflict

Oil prices have experienced a notable increase due to escalating conflicts in the Middle East. Brent crude futures rose by 0.6% to $72.40 per barrel, while U.S. West Texas Intermediate (WTI) crude futures increased by 0.6% to $68.52 a barrel. This surge is attributed to concerns over potential supply disruptions stemming from regional tensions. Oil set for weekly gain on Iran sanctions, OPEC+ plan to rein in overproduction

Precious Metals: Gold Prices Reach Record Highs

Gold prices have climbed to unprecedented levels, driven by investor demand for safe-haven assets amid global uncertainties. Spot gold advanced by 1.7% to $3,383.87 an ounce, marking a new record high. Analysts anticipate that gold prices could surpass $4,000 per ounce by the second quarter of 2026. JP Morgan see gold prices crossing $4,000/oz by Q2 2026

Base Metals: Copper Smelters Face Market and Pricing Crises

Copper smelters are grappling with significant market and pricing challenges. Treatment and refining charges (TCRC) have turned negative, compelling smelters to pay miners to process copper concentrates. This shift is primarily due to an oversupply of smelting capacity, especially in China, outpacing the growth of global mine production. Copper smelters are facing both market and pricing crises

Agricultural Commodities: Coffee Prices Hit All-Time Highs

Coffee futures have reached new record highs, surpassing US¢ 400.0/lb for the first time. This surge is driven by concerns over coffee availability and lower stock levels in major producing and consuming countries. The March 2025 contract closed at US¢ 404.35/lb, reflecting a weekly increase of 7.0% and a cumulative rise of 26.5% in 2025. Weekly Commodity Summary

Market Outlook: Anticipated Decline in Commodity Prices

The World Bank projects a significant decline in global commodity prices over the next two years, attributing this trend to weakening global growth and rising trade barriers. Prices are expected to drop by 12% in 2025 and an additional 5% in 2026, returning to pre-COVID-19 levels observed from 2015 to 2019. While this may help moderate near-term inflation, it poses challenges for developing economies reliant on commodity exports. World Bank sees commodity prices falling to pre-COVID levels

In summary, the commodity markets are currently navigating a complex landscape shaped by geopolitical conflicts, economic policy shifts, and evolving global demand. Stakeholders are advised to stay informed and exercise caution in this volatile environment.