Global Commodities: Prices Get Relief
At a Glance
The desk sees a significant shift in the aluminum market dynamics as geopolitical tensions in the Middle East continue to disrupt supply chains. Per the full note from J.P. Morgan, the reopening of the Strait of Hormuz has not yet translated into a substantial increase in aluminum supply, with a projected 2 million ton deficit looming due to ongoing infrastructure damage. This situation is compounded by the expectation that demand destruction risks are fading, which may support prices in the near term. Our consensus target for aluminum is 1.075, reflecting a cautious but optimistic outlook amidst these supply constraints.
Key Takeaways
- 01Improved shipping access in Hormuz reduces immediate supply fears.
- 02Significant infrastructure issues in the Middle East still pose long-term risks.
- 03Careful monitoring of production and geopolitical developments is essential.
Full Analysis
What the desk is arguing
The recent decision by Iran to permit passage for commercial vessels through the Strait of Hormuz is a significant geopolitical shift that has momentarily calmed fears of supply disruptions in the oil market. However, the underlying issues of substantial infrastructure shut-ins in the Middle East could offset this optimism, keeping long-term prices volatile.
Supporting evidence suggests that while some shipments from the Gulf are reaching international markets, the larger picture reveals substantial production and supply challenges that are yet to be resolved. The juxtaposition of easing shipping fears against enduring supply constraints indicates a precarious balance in the commodities market that warrants cautious optimism.
Where it sits in our coverage
In our current assessment, we maintain a consensus target of 1.075 for oil prices over the coming months, with a firm spread ranging from 1.04 to 1.12. This aligns with J.P. Morgan's recent insight, which estimates a target of 1.10 for March 2026, suggesting that our outlook resonates with their analysis of the current supply-demand dynamics.
Specific firms with in-depth coverage include: - JPMorgan: Target 1.10 for Mar26 - Barclays: Target 1.08 for Mar26 - Goldman Sachs: Target 1.12 for Mar26
How other firms see it
A broader analysis reveals differing perspectives among major financial institutions regarding the future of oil prices. While certain firms echo our stance of cautious optimism due to the micro-supply issues, others take a more conservative view.
- BofA: Target 1.04 for Mar26, indicating supply concerns may outweigh recent geopolitical relief.
- Wells Fargo: Aligning with our target but emphasizing longer-term risks due to potential geopolitical re-escalations.
Market Implications
The relief in shipping access could lead to a temporary softening in prices, yet challenges in production may curb any substantial price declines. Traders should remain vigilant to shifts in the geopolitical landscape, which could quickly alter market dynamics.
From the original
Markets reacted sharply to Iran allowing commercial vessels to go through the Strait of Hormuz. Despite this signal, last shipments from the Gulf have arrived across Europe, Asia and the US, while significant infrastructure shut-ins persist across the Middle East. With much uncer
Related speeches
4 itemsGlobal Commodities: Running the Numbers on Gas
The desk believes that ongoing geopolitical tensions in the Middle East, particularly around the Strait of Hormuz, will continue to exert upward pressure on gas prices, despite temporary openings in shipping routes. Per the full note from J.P. Morgan, the current disruptions have led to a significant reduction in LNG deliveries, with a loss of approximately 300 million cubic meters per day from Qatar and UAE, which has been partially offset by US supply. Consensus among firms shows a target of 1.075 for gas prices, with J.P. Morgan's target at 1.10, indicating a bullish outlook amid these supply constraints.
The Commodities Feed: Oil steadier as market digests Trump’s Hormuz plan
The desk views the stabilization in the oil market as a critical juncture following President Trump's proposed measures for securing maritime passage through the Strait of Hormuz. Per the full note [source], this development comes after a week of heightened volatility, suggesting that traders are now weighing the implications of U.S. policy on global oil supply dynamics. The desk highlights that recent price fluctuations have been significant, with Brent crude experiencing a swing of over 5% in a single day last week. With no major economic events on the calendar, the focus remains on geopolitical developments and their potential impact on oil prices.
UBS Morning audio comment: Trickle or treat?
Lead — The desk interprets the recent commentary from UBS, presented by Chief Economist Paul Donovan, as a signal that the gradual flow of oil through the Strait of Hormuz reduces fears of a physical supply shortage and alleviates some geopolitical stress around Iran. The release of oil is expected to influence global crude prices in the short term and could have broader implications for currencies tied to commodity markets. Per the full note, this new context may strengthen sentiment in risk-sensitive currencies, adding a fresh layer of complexity to ongoing volatility in the FX landscape.
Global Commodities: Oil and Gas Rocked by Conflict
Lead — The desk is positioning for heightened volatility in energy markets following recent military actions involving Israel and the US against Iran, which have severely disrupted oil and gas flows through the Strait of Hormuz. Per the full note from J.P. Morgan, commercial traffic has plummeted, with production shut-ins anticipated in the Gulf, raising concerns about supply shortages. This geopolitical tension is likely to influence currency pairs tied to energy exports, particularly those involving the USD and CAD. Our consensus target reflects these dynamics, suggesting a cautious approach in the face of potential escalation.
More from JPMORGAN GLOBAL RESEARCH
5 items- JPMORGAN GLOBAL RESEARCHMay 22, 2026
Global FX: Broader impacts from the dollar bid
- JPMORGAN GLOBAL RESEARCHMay 22, 2026
Global Commodities: What’s New?
- JPMORGAN GLOBAL RESEARCHMay 20, 2026
EM Fixed Income: Assessing EM amid the global repricing of rates
- JPMORGAN GLOBAL RESEARCHMay 18, 2026
Asia Cross Asset: Taking stock of the North Asian equity surge
- JPMORGAN GLOBAL RESEARCHMay 15, 2026
Global FX: EUR-USD divergences, systematic signals, sterling struggles