How the Iran conflict has affected commodity markets: The seesaw continues

The Iran conflict has caused sharp but contained commodity-market disruptions, with supply responses and demand adjustments limiting the economic damage while risks remain for inflation and monetary policy.

• Brent crude rose above $100 per barrel at the start of the conflict, fell to $71.57 on July 1 after the June 17 ceasefire, and climbed back above $100 in early September.
• Oil prices have remained relatively contained because workaround pipelines, covert flows, slower-than-expected inventory draws and consumer demand reductions have offset part of the disruption.
• Additional production from Brazil, Venezuela, Canada, the United States and Guyana could bring more non-Hormuz supply online; Brent is forecast to average $87 per barrel in 2027 under a prolonged-conflict scenario versus $64 in the peace baseline.
• Gold weakened in June as inflation fears and a stronger U.S. dollar increased rate-hike risks, but central-bank buying and de-dollarization are expected to support a recovery in 2027 if the Federal Reserve turns more dovish.
• Attacks on Middle Eastern aluminum smelters representing around 4% of global supply pushed LME spot prices from about $3,007 to $3,707 per metric ton in early June, while J.P. Morgan still forecasts a global deficit of more than 2 million metric tons between the second and fourth quarters of 2026.

Takeaway: Commodity markets have absorbed the conflict better than initially feared, but prolonged constraints around the Strait of Hormuz could keep oil and aluminum structurally supported and intensify inflation and financial-stress risks if central banks need to tighten policy.