U.S. Commodities – Markets on Edge: Commodities Caught Between War and Washington

Commodity markets are navigating troubled waters as geopolitical tensions and uneasiness surrounding U.S. trade policy are fueling volatility across various commodity markets. With a rise in conflict in the Middle East, risk premiums for energy spiked as the market priced in supply disruptions and reserves drawdown. As investors brace for global instability, gold ($3432.18oz) and platinum ($1,295.25oz) prices reach year-to-date (YTD) highs. Commodities are on a tight rope, as the markets are reacting expeditiously to political and physical conflicts.

Oil was caught in the crosshairs amid the confrontation in the Middle East. WTI and Brent Crude rose to nearly $75/barrel, reaching levels not seen since April. As the clash between Isreal and Iran continues, all eyes are on the U.S. as markets closely monitor the potential for U.S. involvement.

Geopolitical conflict is not the only thing driving the commodities market. Investors are still cautious on U.S. policy, as debates surrounding the debt ceiling continue in Washington and investors anxiously await the effects of the new U.S.-China trade deal. The new deal aims to ease export restrictions on rare earth metals and place a pause on tariffs. While the new trade deal seeks to alleviate the strained relationship between the U.S. and China, more conversations are needed to address other issues such as controls surrounding semiconductor exports.