The Strait of Hormuz: Reopened, Sort Of

Commodity markets are facing a changing energy shock in which tanker shortages and supply-chain disruptions are likely to keep prices volatile through year-end.

• Middle Eastern energy exports have recovered to roughly 80% of their pre-war level, but attacks and tanker shortages are limiting the prospect of near-term oil-price stabilization; freight rates have reached new highs.
• Heavy crude is accumulating in North America, widening the spread between WCS and WTI, while crude oil is expected to end the year at around US$80 per barrel.
• Refined-product shortages persist: US diesel prices have risen 15.9% since August, compared with a 6.7% increase for gasoline, while metal prices are expected to remain broadly unchanged through year-end as Asian manufacturing slows.
• Gold is trading around US$4,200 per ounce after a pullback caused by a stronger US dollar and higher rates and yields, but continued inflation and geopolitical uncertainty are expected to lift it to US$4,500 by year-end.
• North American lumber demand is constrained by weak US residential construction and higher mortgage rates, although Canadian producers benefit from US softwood-lumber duties falling from 35% to 25% on October 20; grain inventories appear sufficient, but weather, geopolitics and volatile fertilizer costs remain risks.

Takeaway: Investors should expect continued commodity-market dispersion and volatility rather than broad price stabilization, with tanker constraints supporting oil risk, gold benefiting from uncertainty and agricultural markets exposed to geopolitical and weather shocks.