Tension Between US and Iran Triggers Energy Markets and Commodity Prices
While conflict risks and supply concerns between the US and Iran pushed energy prices up in global markets, divergences were observed in precious metals and agricultural products.
Last week in the commodity markets, military tension between the US and Iran, expectations regarding the Fed's monetary policy, and global supply concerns were decisive. While shipping concerns in the Strait of Hormuz and the increasing risk premium led to sharp increases in energy prices, different trends were observed on the agriculture and precious metals fronts.
Geopolitical Jump in Energy Markets
The intensification of conflicts between the US and Iran triggered fears regarding global energy supply. Although no permanent disruption occurred, the increasing risk premium caused Brent oil to gain 7.2 percent on a weekly basis.
Historical Levels in Natural Gas
This activity in the energy markets was also reflected in natural gas prices. Natural gas prices on a British thermal unit basis increased by 3 percent, while benchmark natural gas prices in Europe tested their highest level since the beginning of 2023.
Central Bank Demand in the Gold Market
Precious metals followed a volatile course under the pressure created by interest rate expectations. While gold finished the week with a 0.4 percent decline, central banks' demand for gold did not slow down, and the People's Bank of China increased its reserves to 2,366 tons.
Supply Shortages in Base Metals
Among other precious metals, palladium increased by 1.9 percent, while silver fell by 0.2 percent. In base metals, supply bottlenecks pushed prices up, and zinc reached $3,990 per ton, settling at a four-year peak.
Decline in Wheat Prices
The supply-demand balance and weather conditions created a mixed picture in agricultural products. Mild messages from leaders about a possible diplomatic solution to the Russia-Ukraine war pulled wheat prices down by 5.6 percent with the expectation that Black Sea trade would normalize.
Upward Trend in Soybeans and Corn
Within the scope of other developments in the agricultural sector, China's purchases and drought forecasts in the US brought a 1.8 percent increase in soybeans and a 0.5 percent increase in corn.
Cocoa, Coffee and Sugar Balance
Due to favorable weather conditions in production regions and increasing stocks, cocoa lost 7 percent and coffee 4.7 percent in value. Sugar gained 3 percent in value due to the decline in production in Brazil.