Given that the war in the Persian Gulf continues, uncertainty remains in commodity markets. Everything still revolves around energy prices, oil, the Strait of Hormuz, and supply chains, and what follows is inflation and a potential recession if this state continues or, worse, if the situation escalates further in a military sense.
How long can the Strait of Hormuz remain closed? How much can Gulf countries endure, and how much can oil-importing countries withstand? Furthermore, inflation is knocking at the door again. Until recently, there was talk of reducing interest rates by central banks, and now the option is to increase them. Will the FED ultimately raise interest rates in 2026? Bond markets are saying yes.
The reason for this is the rise in oil prices of about $50/bbl since the beginning of the year, and banks like Goldman Sachs estimate that crude oil at these levels adds 1-1.5 percentage points to the U.S. consumer price index. The math is simple, and Powell sees it too. The market reaction is a stable dollar, nervous stock prices, and a fading appetite for risk. As for this week, we face a week with little data, so the market focus will remain on oil price movements and the war in the Middle East.
Trump and Netanyahu have caused havoc, but others will pay the price. In fact, the U.S., Israel, and Russia are profiting and have no interest in restoring oil traffic through the strait. And the EU? The Wall Street Journal predicts that the energy crisis caused by the war in Iran could deal a heavy blow to the European economy, a bitter disappointment for a region that hoped for accelerated growth this year. Other side effects, such as inflation and loss of purchasing power, are beneficial for those heavily indebted: the U.S., China, Japan, and the United Kingdom.
At the same time, the risk of possible Chinese retaliation in Taiwan is rising. The U.S. national debt reached another historic milestone last week, surpassing $39 trillion for the first time, as persistent federal budget deficits increase the debt. China, Japan, and the United Kingdom have lower debt in absolute terms, but percentage-wise, they are in a worse position than the U.S.
In an era of geopolitical uncertainty, concerns about inflation, and currency volatility, gold remains the foundation of national reserves. According to the latest data, the largest gold holders in 2025 are: the U.S. (8,133.5 tons), Germany (3,351.5 tons), IMF (2,814 tons), Italy, France, Russia, China, Switzerland, India, Japan (846 tons). The U.S. holds more than twice the gold reserves of any other country.
European central banks remain the main gold holders decades after the end of the gold standard. China and Russia continue to build strategic reserves amid changing global financial dynamics. Gold remains a hedge against currency risk, exposure to sanctions, and systemic financial shocks. As central banks move away from traditional reserve assets, gold is regaining strategic importance. Therefore, in a world of rising debt and geopolitical fragmentation, the question is no longer “Is gold relevant?” but “How much is enough?”.
Energy Shock: Oil, Gas, and Disrupted Supply Chains
Brent crude oil futures prices have risen above $110/bbl and are on track for the highest closing price since mid-2022, as investors assessed Trump’s ultimatum calling for Iran to reopen the Strait of Hormuz. Over the weekend, Trump warned that he would “destroy” major Iranian power plants if the shipping route was not opened for navigation by late Monday. In response, Tehran stated that it would target U.S. and Israeli assets throughout the region, including energy, information technology, and desalination infrastructure, if its own energy facilities were attacked.
A senior Iranian official also warned that financial entities purchasing U.S. Treasury bonds could be considered “legitimate targets”. Oil prices have risen by approximately 50 percent since the beginning of the war in Iran, as the conflict shows no signs of calming, effectively closing the Strait of Hormuz and sharply reducing oil production in the Middle East. Coordinated releases of strategic reserves and U.S. efforts to facilitate the sale of Russian and Iranian oil have so far failed to curb the rise.
However, on Monday, there was a sharp turnaround in the markets after Donald Trump announced that Iran had signaled a willingness to partially open the Strait of Hormuz and continue limited oil exports. Trump also indicated that the U.S. would temporarily postpone further attacks on Iranian energy infrastructure to allow for de-escalation.
Although a formal agreement has not been reached, the markets interpreted this development as a signal that the worst-case scenario, a prolonged closure of the Strait of Hormuz, has at least been temporarily avoided. The market reaction was swift: Brent oil prices fell by about 7 to 10 percent, dropping from levels above $110 to approximately $100 per barrel, as part of the previously built risk premium began to withdraw from the market.
Despite this, analysts warn that this is a fragile de-escalation without a solid political agreement. Any new escalation could push energy prices back up and return the scenario of rising inflation and interest rates.
European natural gas futures prices (TTF) have risen to levels above €61/MWh, extending last week’s gains, as rising threats to energy facilities in the Middle East heightened fears of deeper supply disruptions. Last week, both sides conducted a series of attacks targeting energy infrastructure, including the Qatari facility Ras Laffan, the world’s largest liquefied natural gas (LNG) plant.
Meanwhile, global LNG exports have fallen to their lowest level in six months, highlighting tightening supply conditions. Deliveries have dropped by approximately 20 percent to 1.1 million tons, mainly due to a decline in exports from Qatar and, to a lesser extent, the UAE. European gas prices have now nearly doubled compared to pre-war levels, rising by more than 90 percent so far this month.
The calming of geopolitical tensions quickly spilled over into the natural gas market. The benchmark European TTF contract fell by more than 16 percent after Donald Trump stated that the war could end ‘very quickly’, which the markets interpreted as a signal of de-escalation and possible normalization of supply.
However, as with oil, markets remain extremely sensitive to developments, and gas volatility will continue to primarily depend on the security of energy routes and infrastructure in the Middle East.
Agriculture and Metals Under Pressure: Price Drops and Rising Costs
Iran bombed a Qatari helium production facility. One-third of the global supply vanished overnight. There are no substitutes. There is no timeline for restarting. This is not just a war story. It extends to your next laptop, your next MRI, your next phone, as helium is needed for the aforementioned.
In the agricultural world, traders will monitor the weather in the U.S. where it is dry in the plains, moist in the corn belt, crop development in South America, and the state of stocks in the U.S. and planting intentions of American farmers that await us next Tuesday. Last week, aside from soybean meal, prices of major agricultural products fell on both sides of the Atlantic. Coceral made a harvest estimate in the EU for 2026. Soft wheat production is estimated at 142.6 million tons, which is 6.1 million tons less than last year.
Barley production is estimated at 59.3 million tons, which is 4.3 million tons less than last year, while corn production is estimated at 60.7 million tons, 400,000 tons less than last year. Rapeseed production is estimated at 21.1 million tons, 300,000 tons less than last year. Since the beginning of the war in the Middle East, maritime freight rates have risen by more than 20 percent, which is a depressing factor for exporting countries but an inflationary factor for importing countries.
Copper futures prices have fallen below $11,600/t, reaching their lowest levels in over three months, as the prolonged conflict in the Middle East has raised concerns about global inflation and growth, burdening demand for metals. The U.S. and Israel’s war with Iran has entered its fourth week with no signs of calming, and rising oil prices threaten economic activity and fuel inflation, prompting a hawkish outlook among major central banks.
Markets have reduced expectations for further FED interest rate cuts this year, while some traders have factored in a potential interest rate increase towards the end of the year. The ECB, BOE, and BOJ have also signaled readiness for further tightening of policy if inflationary pressures continue. Meanwhile, lower copper prices have prompted some purchases from Chinese manufacturers, providing modest support.
