Key Takeaways
- Oil now sits at just over $115 a barrel – up 59% since the start of the conflict with the forward curve showing it above $100 through to July.
- Although peace talks with intermediaries are underway, there remains the deadline of 6 April from President Trump for Iran to agree a deal or face attacks on its energy infrastructure, to which Iran would inevitably retaliate.
- This is not just about oil – with gas, helium, ammonia and urea supplies also affected, the impact is across the commodity space, with implications for fertiliser production and thus food prices.
- Gold, which has been on a strong run so far this year, is down 14% since the war started, with the risks on the inflation side overwhelming the insurance gold can provide for geopolitical shocks in the short term.
- The next fortnight should be useful in terms of guiding us as to where things go next, but we can be sure to expect elevated energy prices for some time yet.
Today we look at the potential upside – and even downside – risks to the oil price and other commodities from the Iran war and where they might go from here.
As of the morning of 30 March 2026, the oil price sits at just over $115 a barrel. That is up 59% since the start of the conflict. Looking at the forward curve for Brent crude, it is now $100 a barrel all the way through to July, and by December it is down to about $85 a barrel. That is still a significant premium to where we were before the war broke out. For context, oil was expected to be around about $60 a barrel by the end of 2026 – notwithstanding geopolitical risks, which we are of course now in the midst of.
So, where do we go from here? Well, there are clearly upside risks should we see the continued closure of the Strait of Hormuz or, indeed, further escalation from here. Peace talks with intermediaries are underway, but there is still that deadline of 6 April from President Trump for Iran to agree a deal or face attacks on its energy infrastructure, to which Iran would inevitably retaliate.
In addition, in Yemen over the weekend we saw the Houthis, backed by Iran, firing their first missile towards Israel. This is their first involvement in this conflict and brings back memories of the past few years of the Houthis attacking shipping in the Red Sea. The key choke point there is the Bab al-Mandeb Strait, which is the gateway to the Red Sea. Obviously, the Red Sea leads to the Suez Canal, which is a vital shipping line through to Europe, but it could also be a backup for oil to exit the Gulf via a pipeline that runs to the Saudi Arabia’s west coast on the Red Sea. Disruption here would be yet another massive headwind for global supply chains and pose upside risks to commodity prices.
Of course, we may see some sort of peace deal agreed, hopefully involving the Strait of Hormuz. A peace deal without this would likely not be acceptable to Trump, but if it is included it could mean that shipping can start to be unlocked.
Of course, it is worth bearing in mind that this is not just about oil. We are seeing impacts on gas prices, helium prices and ammonia and urea, which is very important for fertilizer and thus in turn for food prices. So, the impact here is really across the commodity space, and it will be felt more in April as inventories are drawn down. Existing stockpiles are already starting to be unwound and emergency reserves, from which we have seen releases, are also being drawn down. So, we are going to see both higher prices and more concerns about supply as we go through April.
Meanwhile, another commodity, gold, which has been on a very strong run so far this year, has fallen quite significantly. It is down 14% since the war started. Clearly the risks on the inflation side are overwhelming the insurance that gold can provide for geopolitical shocks in the short term.
Where we go next remains binary – it really does depend on politics and whether Trump chooses the path of escalation or de-escalation, and then how Iran responds.
It is worth remembering that the Strait of Hormuz is not closed, it hasn’t been mined. So, if a compromise deal is reached then the Strait can be reopened and unblocked fairly quickly. But if we do see escalation, we could see those strikes on energy infrastructure to which Iran said it will respond. We also saw Trump talking over the weekend to the Financial Times about controlling Iran’s oil. Now, that seems a long way off, but significant risks clearly remain to the upside – for all those mentioned commodities – if we get this further escalation. We’ll also see concerns from a supply point of view as well. Again, that may well impact different parts of the world differently, but we’re going to be hearing a lot more about supply concerns if this drags on to April.
I think the next fortnight should be a helpful guide in terms of where we go next. At the start of this conflict Trump outlined a proposal for around four to six weeks for military operations. We are very much coming to the end of that window. However, we will continue to see elevated energy prices for some time to come due to the risk premium being built into commodity prices. There is also the potential for some downside moves if we see positive movement on a peace deal.
So, lots of uncertainty. Financial markets remain unsettled by this whole process and in the short term we see commodity prices being quite a headwind, but there are still reasons to be positive longer term should we see some sort of resolution.
