The Commodities Feed: Oil rises amid US-Iran conflict
Lead — Oil prices have risen for the fourth consecutive session, primarily fueled by increasing tensions surrounding the US-Iran conflict and the specter of supply disruptions through the strategically vital Strait of Hormuz. Per the full note from ing-think, the situation has elevated risk premiums in the oil market, while a bullish API inventory report indicating a more substantial draw than anticipated further supports the upward trajectory in oil prices. Current trading dynamics suggest an alignment towards higher oil prices, though the absence of scheduled high-impact events in the upcoming month means that traders will be closely monitoring geopolitical developments. The desk expects these conditions to keep oil volatility elevated for the near term, with potential spillover effects into currency markets, particularly those tied to commodity currencies.
What the desk is arguing
The desk sees the ongoing US-Iran tensions as a significant driver for increased oil prices in the near term, compounded by inventory draws that exceeded market expectations. Per the report, US crude inventories fell by 328k barrels last week, indicating tighter supply conditions amidst rising geopolitical risks.
This trajectory is bolstered by higher diesel crack spreads, which have reached record levels within the market. US diesel crack spreads have surged above $100/bbl and more than doubled since the onset of the US-Iran conflict, illustrating severe supply constraints.
Where it sits in our coverage
Our consensus target for oil prices is currently set at 1.075 with a range between 1.04 and 1.12. Specific firm forecasts include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)
This perspective aligns with the forecasts from jpmorgan, pushing towards the upper threshold of our target range, while contrasting with bofa's more conservative outlook.
How other firms see it
Firms like jpmorgan have adopted a bullish stance, driven by the tightening supply dynamics and geopolitical tensions, whereas bofa remains cautious, suggesting that external factors might mitigate upward price pressures.
Traders should watch the EUR/USD trajectory, which may reflect interest rate adjustments affected by oil price fluctuations and ongoing economic ramifications from the US-Iran conflict.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Oil prices have risen for four consecutive sessions due to US-Iran conflict
- 02API reported a larger-than-expected inventory draw
- 03Diesel crack spreads have surged, indicating tightening supply
- 04Geopolitical risks are likely to continue impacting oil price volatility
Market implications
Traders should monitor oil prices closely as they approach key psychological levels, particularly the $100/bbl mark for diesel. Additionally, geopolitical developments surrounding the US-Iran conflict could prompt increased volatility in related currency pairs.
Risks to this view
Should diplomatic efforts lead to a significant de-escalation of tensions with Iran or changes in sanctions policy, oil prices could experience a rapid correction. Watch for any announcements from the US government regarding sanctions or negotiations that could signal a shift in the current geopolitical landscape.
Articles The Commodities Feed: Oil rises amid US-Iran conflict Published 07:59 Commodities daily Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Oil prices rose for a fourth consecutive session on Wednesday, supported by ongoing uncertainty surrounding the US-Iran standoff and the potential implications for shipping through the Strait of Hormuz Ewa Manthey and Warren Patterson Energy - Oil inventory draws support prices Oil prices extended gains for a fourth consecutive session on Wednesday as uncertainty over a resolution to the US-Iran conflict continued to support risk premiums. US President Donald Trump reiterated that no talks were underway with Tehran and signalled that additional sanctions could be announced this week. Reports of reduced vessel traffic through the Strait of Hormuz have also raised concerns over potential oil supply disruptions.
The oil market also drew support from a slightly bullish API inventory report. US crude inventories fell by 328k barrels last week, compared with market expectations for a 74k-barrel draw. Stocks at the WTI delivery hub in Cushing declined by 1.4m barrels.
Product inventories were mixed, with gasoline stocks rising by 1.1m barrels while distillate inventories fell by 2.8m barrels. The more closely watched EIA inventory report is due later today. US diesel crack spreads climbed above $100/bbl yesterday, reaching a record high as global refining constraints and supply disruptions tightened the market.
Diesel cracks have more than doubled since the start of the US-Iran conflict and are up more than 20% month-to-date. Export restrictions from Russia, following repeated Ukrainian drone attacks on refineries, have reduced diesel availability, while disruptions affecting energy infrastructure elsewhere have added to concerns over supply and helped support prices. Metals - Copper retreats as LME stocks jump LME copper prices fell below $14,000/t yesterday, posting their sharpest decline since 23 July, as fresh deliveries into LME warehouses eased a prolonged supply squeeze.
On-warrant copper inventories rose by 20,025 tonnes, the largest daily increase since 7 April, extending gains for a sixth consecutive session to 123,100 tonnes. Most of the inflows were directed to warehouses in Asia and the US. The increase in stocks helped alleviate tightness after inventories had been depleted by strong shipments to the US, driven by tariff-related arbitrage opportunities.
Reflecting the improved supply situation, the LME cash/3M copper spread narrowed to $248/t, while the tom-next spread also retreated after recently reaching levels last seen during the 2021 copper squeeze. The latest COTR data showed speculators cut net long copper positions by 6,340 lots to 53,914 lots, ending a two-week streak of increases despite higher copper prices. In aluminium, money managers reduced net longs by 2,267 lots to 78,492 lots, largely driven by a 22,874-lot increase in gross short positions.
Zinc net longs also declined, falling by 7,602 lots to 37,759 lots as of last Friday. Agriculture - Sugar climbs on mounting supply concerns Sugar prices extended their rally for a second consecutive session yesterday, with ICE No.11 raw sugar settling nearly 3.6% higher at its strongest level since May 2025. Gains were driven by reports that India is considering reducing or scrapping its 100% import duty to help replenish domestic supplies ahead of a seasonal increase in demand.
Sugar prices are now up more than 16% this month, supported by tightening global supplies. Meanwhile, speculative net long positions rose to 58,990 lots, the most bullish positioning since April 2025. Additional support has come from weather risks, with El Niño threatening sugar production across Asia, while above-average rainfall in Brazil has disrupted sugarcane processing, further tightening supply expectations.
Commodities Feed Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Authors Ewa Manthey Commodities Strategist Ewa Manthey is a Commodities Strategist based in London.
She joined the bank in September 2022 and covers the entire commodities complex, with a particular focus on the metals markets. She has… Warren Patterson Head of Commodities Strategy Warren Patterson is Head of Commodities strategy based in Singapore. He joined the bank in April 2016 and covers the entire commodities complex.
Previously, he worked at a commodities trade house… In this article Energy - Oil inventory draws support prices Metals - Copper retreats as LME stocks jump Agriculture - Sugar climbs on mounting supply concerns
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