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SINGAPORE, March 9 — The escalating conflict involving Iran has sent shockwaves across global commodity markets, pushing prices of oil, agricultural products, metals and gold into sudden volatility as investors react to growing geopolitical risks.
Energy markets experienced the most dramatic reaction, with oil prices surging around 25 per cent on Monday, marking one of the sharpest single-day increases in recent years as traders feared disruptions to supply from the Middle East.
The spike pushed Brent crude close to US$120 per barrel, the highest level since 2022, driven by concerns that the war could disrupt shipping routes and production facilities across one of the world’s most important oil-producing regions.
Oil Market Hit Hardest
Energy analysts say the oil market is particularly sensitive to conflict in the Gulf because the region is responsible for a large portion of global energy supply.
A key concern is the Strait of Hormuz, one of the world’s most critical shipping routes for crude oil and liquefied natural gas. Roughly 20 per cent of global oil shipments pass through the strait, making any disruption there capable of triggering major price spikes.
In recent days, tanker traffic through the strategic waterway has been severely disrupted amid security fears, further fueling concerns over potential supply shortages.
Food Commodities Also Rise
The ripple effects of the war have spread beyond energy markets into agricultural commodities, as higher fuel costs and supply concerns influence food production and transportation.
Prices of palm oil, soybean oil, wheat and corn have all risen sharply in global trading as markets anticipate higher shipping costs and potential disruptions to trade routes.
For many developing economies, rising food prices pose a major risk because agricultural products are closely tied to fuel costs and international logistics.
Metals Market Sees Mixed Reaction
Industrial metals have also been affected by the geopolitical turmoil.
Prices of aluminium surged to a four-year high, partly due to supply concerns linked to producers in the Middle East declaring force majeure after attacks and operational disruptions.
However, other base metals experienced declines as the stronger US dollar made commodities priced in dollars more expensive for global buyers.
Market analysts say such mixed reactions are common during geopolitical crises, when investors quickly shift capital across different asset classes.
Gold and Safe-Haven Assets
Traditionally considered a safe-haven investment during periods of geopolitical uncertainty, gold prices experienced volatile movements as investors balanced risk concerns with expectations of higher interest rates.
While gold initially attracted demand due to the war, the strengthening US dollar and rising inflation expectations later pushed prices lower in early trading.
Financial experts note that the commodity market’s reaction highlights how quickly global supply chains can be affected by geopolitical conflict.
War’s Growing Global Economic Impact
The economic consequences of the Iran conflict are spreading across financial markets worldwide.
Global stocks have already declined amid fears that higher energy prices could drive inflation and slow economic growth. Analysts warn that prolonged instability could eventually lead to a global economic slowdown or even recession if supply disruptions worsen.
The war has also disrupted aviation, trade routes and energy production across the Middle East, amplifying uncertainty for businesses and policymakers.
Governments Monitoring Market Shock
Governments and central banks around the world are now closely monitoring the situation as commodity price spikes begin affecting consumers and industries.
Higher oil and food prices could push up inflation globally, forcing policymakers to balance economic growth with the need to stabilise prices.
For now, markets remain highly sensitive to any developments in the Middle East conflict, with traders expecting continued volatility across commodity markets in the weeks ahead.
