What's takeaway 1 on The Commodities Feed?

Escalating US-Iran tensions are creating a bullish environment for oil prices.

What's takeaway 2 on The Commodities Feed?

US commercial crude oil inventories have dropped to their lowest levels since 2022.

What are the market implications for The Commodities Feed?

Investors should monitor the Brent crude price closely, particularly for resistance levels around $80/bbl, as a break above this could signal further bullish momentum. Additionally, keep an eye on volume in oil trades, as increased activity may foreshadow larger market trends.

What are the risks to this view on The Commodities Feed?

Should diplomatic dialogues resume or a de-escalation occur between the US and Iran, it could reverse the current bullish sentiment in oil prices. Additionally, unexpected increases in inventory builds or SPR releases could also undermine the current bullish outlook.

The Commodities Feed: Renewed US-Iran tensions unnerve oil market

What the desk is arguing

The desk posits that the latest US-Iran tensions will support higher oil prices, particularly as supply risks loom large. The limited dialogue and military escalation from both nations signal a sustained volatile environment for oil markets, with tangible effects on physical oil flows from the Persian Gulf. Per the full note, oil prices have increased over the last three days alongside declines in tanker traffic through the Strait of Hormuz.

Supporting this view, US commercial crude oil inventories fell by 1.69 million barrels recently, marking a drop to levels close to the lowest seen in the past year. The reduction in Persian Gulf energy flows and the anticipated cessation of SPR releases create a tight supply scenario, with Dated Brent prices reflecting a premium against front-line futures for the first time in months, adding to the bullish sentiment in the market.

Where it sits in our coverage

Our current consensus target for oil prices is set at $1.075, aligning our expectations closely within the range of $1.04 to $1.12. This reflects projections from several key firms detailed as follows: - jpmorgan: Target at $1.10 (Mar26) - bofa: Target at $1.04 (Mar26)

In terms of positioning, the desk's outlook aligns more closely with jpmorgan’s predictions and sits at the higher end of the consensus range. This indicates an expectation of further price strength in the wake of geopolitical tensions, counter to the more cautious stance exhibited by bofa.

How other firms see it

A number of firms align with our bullish stance on oil prices, emphasizing the potential for supply disruptions. These include jpmorgan, whose projections similarly reflect the tightening market conditions due to geopolitical risks. On the contrary, bofa holds a more conservative outlook, suggesting that prices may remain muted in a potential stabilization scenario.

For traders, oil price dynamics will likely impact currency strengths, particularly within the CAD and NOK, given their direct correlations with crude oil prices and global energy demand.

Articles The Commodities Feed: Renewed US-Iran tensions unnerve oil market Published 02:53 Commodities daily Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Oil prices continue to move higher, with neither the US nor Iran showing any real intent to dial down the latest surge in tensions Warren Patterson and Ewa Manthey Energy - Physical oil market sees renewed strength Oil prices managed to eke out a third day of gains amid few signs of de-escalation between the US and Iran. The US carried out additional strikes against Iran. There are also media reports that the US is considering increasing military operations.

Iran, meanwhile, said it has no plans to talk. The rapid deterioration is having a meaningful impact on vessel flows from the Persian Gulf. Tanker traffic through the Strait of Hormuz remains depressed, with crossings still under clear pressure.

Even so, US officials claim more than 100 vessels managed to get through the strait over the last week with US military support. The concern is that renewed oil supply disruptions come amid the large inventory drawdowns through the second quarter, leaving the market more vulnerable. In addition, global SPR releases, which have helped the market out over recent months, are set to end in the next few weeks.

The reduction in Persian Gulf energy flows is having an obvious impact on the physical market. Dated Brent vs. front-line Brent futures (DFL) is back at a premium of $1.30/bbl, having traded at a discount to the futures through late June and early July. Meanwhile, in the US, Mars crude differentials have rallied.

Buyers are once again seeking alternative supplies amid renewed disruptions in the Persian Gulf. According to the EIA, US commercial crude oil inventories fell by 1.69m barrels over the last week. When taking SPR releases into consideration, total crude oil inventories fell by 4.68m barrels.

US commercial crude oil inventories remain near the lowest levels since 2022, while seasonally they are at their lowest level since 2018. Gasoline stocks continue to fall through the summer, with inventories declining by 1.53m barrels. There was a bit more relief for the distillate market, with inventories growing by 4.56m barrels, on the back of weaker demand.

However, middle distillate markets, both in the US and globally, remain very tight. This is well reflected in the strength in middle distillate cracks. Investment funds boosted their net long in TTF natural gas by 26.7TWh over the last reporting week to 181.9TWh.

The move is dominated by fresh longs entering the market. The LNG and European gas markets remain vulnerable amid the flare-up in hostilities between the US and Iran. There’s increased competition between Europe and Asia for spot LNG cargoes.

Recent heatwaves across parts of Europe and Asia only add to concerns. LNG supply disruptions and stronger power generation demand make the job of refilling storage ahead of the heating season increasingly more difficult. EU gas storage is just 53% full vs a 5-year average of 68%, and some distance from the EU’s minimum target ahead of 75% going into the heating season.

Metals – Gold up as softer inflation eases Fed concerns Gold rose for a second straight session as softer-than-expected US producer price data weighed on the dollar and Treasury yields. Lower energy costs helped ease inflation pressures, reducing expectations of near-term Federal Reserve tightening. Markets now price only a 12% chance of a July rate hike, down from almost 31% a week ago.

Lower rate expectations are supportive for gold. But we believe upside could remain limited in the near term if Middle East tensions continue to support energy prices and keep inflation risks elevated. In base metals, LME lead inventories jumped by a further 86.5kt for a second consecutive session.

They reached a record 456.7kt, with most of the inflows reported into Singapore warehouses. On-warrant stocks also climbed to a record high, while cancelled warrants fell for a second day. The sharp inventory build extended pressure on lead prices, with three-month LME lead declining for a third consecutive session.

Rising exchange stocks point to a well-supplied market and suggest lead could remain under pressure in the near term. Latest data from the International Lead and Zinc Study Group (ILZSG) shows the global lead market recorded a surplus of 19kt in the first five months of 2026, up from 16kt a year earlier. For zinc, the surplus widened to 163kt from 44kt over the same period last year.

Agriculture – Wheat climbs amid Black Sea tensions CBOT wheat prices rallied significantly yesterday, with the market settling more than 7.3% higher. This strength comes amid escalating tensions between Ukraine and Russia, raising concerns over potential disruptions to Black Sea shipping and grain exports. Ukraine reported strikes on several Russian vessels in the Black Sea and said it has targeted more than 100 Russia-linked ships in the Sea of Azov in recent days, heightening risks along key trade routes through the Kerch Strait.

Meanwhile, preliminary estimates from the French Agriculture Ministry indicate that wheat production could decline to 32mt in 2026, down 4% year-on-year and below the historical average. The reduction is largely attributed to lower yields, which are forecast to fall 7% year-on-year to 6.9t/hectare following successive heatwaves. Weaker output from one of the EU's largest wheat producers could further tighten global supplies and lend additional support to prices.

WTI TTF Strait of Hormuz Russia-Ukraine Precious metals Persian Gulf LNG Iran conflict Grains Geopolitics Brent 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 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… 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… In this article Energy - Physical oil market sees renewed strength Metals – Gold up as softer inflation eases Fed concerns Agriculture – Wheat climbs amid Black Sea tensions

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