Effects of the conflict in Iran on financial commodity prices

Following the attacks carried out last weekend by the United States and Israel against Iran, oil prices initially rose by around 7% on Monday, March 2, reaching $77.7/barrel. This first increase, although significant, is still relatively contained when compared to supply risks and uncertainty over the conflict's duration. Initially, the market only priced in a temporary disruption of oil flows through the Strait of Hormuz, believing that the large available surplus could absorb the impact. In this scenario, the surplus is expected to increase further thanks to the rise in supply from OPEC+, decided at the Sunday, March 1 meeting and scheduled to begin in April.
However, during the week, oil prices continued to rise due to increasing tensions and concerns over Iranian attacks on energy infrastructure, which could trigger a full-blown energy crisis. Brent reached $92.7/barrel, nearly 28% higher than the previous week's close, which had already priced in a significant risk premium related to the Middle East conflict.

Similar dynamics affected oil derivatives such as diesel and gasoline, which recorded even more pronounced increases. China requested its refineries to halt exports of these products, and concerns are growing that other countries might adopt similar measures.

To contain rising oil prices, the United States granted India a 30-day waiver to resume purchases of Russian oil. Washington is also considering using its strategic national reserve to support supply and promises to ensure safe navigation through the Strait of Hormuz, including by deploying naval reserves. However, this measure is unlikely to have immediate effects: ships remain exposed to Iranian attacks, and to ensure truly safe passage, Iran's offensive capabilities would first need to be reduced.
Until new signs of stabilization in the Middle East or clearer indications of the conflict's duration emerge, oil prices are expected to remain strongly supported.

While oil prices saw huge increases during the week, natural gas markets in Europe and Asia experienced even more dramatic dynamics. The TTF Netherlands price rose by over 60%, surpassing €60/MWh, while the Asian JKM price showed a similar trend, albeit slightly less intense.
In Europe, prices are supported not only by the blockade of the Strait of Hormuz, through which about 20% of global LNG supply passes, but also by the excessively low level of European stocks. Additional pressure comes from new threats by Putin to redirect gas supplies outside the European market.
Although the EU has already significantly reduced gas imports from Russia and plans to eliminate them completely by the end of 2027, any immediate supply cut in a context of blocked supply and minimal European stocks would exert strong upward pressure on TTF prices.

In the precious metals market, contrary to several analysts’ forecasts, gold and silver prices did not rise following the outbreak of war; in fact, they even declined: gold returned to around $5100/ounce and silver to $80/ounce.
Investors, concerned about a possible escalation of the conflict in the Middle East, preferred to hedge by increasing direct exposure to energy commodities rather than relying on traditional safe-haven assets like gold and silver. In particular, many operators rebalanced portfolios by selling part of their safe-haven holdings to buy financial instruments linked to energy commodities.
Although the fundamentals of precious metals remain solid and an escalation or prolonged conflict could support their prices, they have also been affected by expectations of tighter monetary policies from the Federal Reserve and the European Central Bank, as well as the weekly strengthening of the US dollar.

Industrial metals were also heavily penalized by the strengthening dollar and expectations of tighter monetary policies. Ferrous metals prices saw a slight increase, mainly driven by China iron ore and coils, while non-ferrous metals interrupted their growth trend, showing a slight weekly decline. Among non-ferrous metals, tin experienced the largest drop, followed by copper, affected by a significant rise in stocks recorded this week.
A completely different dynamic characterized the aluminum market, which saw significant increases this week due to new supply concerns. About 8% of global aluminum production is concentrated in the Persian Gulf, and fears of a possible maritime transport blockade through the Strait of Hormuz pushed aluminum prices on the London Metal Exchange (LME) toward levels close to $3400/ton.

In the food sector, there was a notable increase in soybean oil prices, also linked to the outbreak of war in the Middle East. Soybean oil is used as a production input for biodiesel, so its prices tend to be positively correlated with those of oil. In addition, there was a rise in cereal prices and a recovery in coffee prices.

ENERGY

The PricePedia financial index for energy products recorded a spike following the outbreak of war in Iran.

PricePedia Financial Index of energy prices in dollars

The energy heatmap turns red, highlighting strong increases in oil, its derivatives, and natural gas prices in the EU and Asia.

HeatMap of energy prices in euros

PLASTICS

The Chinese financial index for plastics and elastomers also shows a sudden rise, following oil price dynamics.

PricePedia Financial Indices of plastics prices in dollars

Heatmap analysis shows significant growth in Chinese thermoplastics prices, especially for propylene and LLDPE, alongside a decline in elastomers.

HeatMap of plastics and elastomers prices in euros

PRECIOUS METALS

The financial index for precious metals shows a weekly decline.

PricePedia Financial Index of precious metals prices in dollars

Heatmap analysis shows a significant drop in precious metals prices, except for gold, which remains more stable.

HeatMap of precious metals prices in euros

FERROUS METALS

The two financial indices for industrial metals show modest weekly increases.

PricePedia Financial Indices of ferrous metals prices in dollars

Heatmap analysis shows growth in China iron ore and coils prices.

HeatMap of ferrous metals prices in euros

NON-FERROUS INDUSTRIAL METALS

The two financial indices for non-ferrous metals stabilized, recording a slight weekly decline.

PricePedia Financial Indices of non-ferrous industrial metals prices in dollars

Heatmap analysis of non-ferrous metals shows an increase in aluminum prices and a drop in tin prices.

HeatMap of non-ferrous metals prices in euros

FOOD PRODUCTS

All food product indices show weekly price growth.

PricePedia Financial Indices of food prices in dollars

CEREALS

The cereal heatmap shows a weekly increase in the 3-day moving average of rough rice prices.

HeatMap of cereal prices in euros

TROPICALS

The tropical products heatmap shows a recovery in coffee prices.

HeatMap of tropical food prices in euros

OILS

The food oils heatmap shows a generalized increase in prices, particularly strong for soybean oil.

HeatMap of food oil prices in euros