The Commodities Feed: De-Escalation Hopes Fade

(MENAFN- ING) Energy – Oil resumes advance

Oil prices saw one of their sharpest intraday swings on record on Monday after President Donald Trump signalled a potential de‐escalation with Iran, triggering a sharp risk‐off move in crude and a rally in equities. Brent fell as much as 14% to $96/bbl following Trump’s comments, before recovering to trade near $102/bbl after Iranian media reported there had been no direct communication with the US. Brent closed under $100 for the first time since March 11. Prices have since recovered further, climbing towards $103 this morning, amid reports that Saudi Arabia and the UAE have taken steps toward joining the conflict, raising the risk of escalation.

The initial sell‐off followed remarks from Trump suggesting both sides were keen to“make a deal”, with“major points of agreement” already in place. He added that the Strait of Hormuz would reopen very soon, potentially under joint US‐Iran control, and said oil prices would“drop like a rock” once a deal is reached. Iran denied negotiations were taking place. Earlier, Trump had given Iran until Monday evening (New York time) to reopen Hormuz or face strikes on energy and power infrastructure.

The comments marked a sharp shift in tone after days of escalating tensions. Just hours earlier, Israel had launched strikes on Iranian infrastructure, while Tehran had stepped up retaliatory actions against Gulf nations, with little evidence of diplomatic progress.

Meanwhile, the International Energy Agency has described the current situation as the largest oil supply disruption in history, underscoring the fragility of the outlook despite the latest headlines.

In Asia, state‐owned China Petroleum & Chemical Corp. (Sinopec) has cut operating rates by 5% in March to conserve crude, prioritising domestic fuel supply as Middle East disruptions weigh on shipments, particularly through Hormuz. China has also tightened fuel export controls and capped domestic price increases to cushion the impact of the conflict. Sinopec said current stockpiles are sufficient to buffer elevated prices for the next two months, with further run‐rate adjustments planned for April and May.

In gas markets, European prices fell on Monday, with TTF closing more than 4% lower. The reaction was more muted than in oil, partly due to ongoing structural damage to gas infrastructure, particularly in Qatar. LNG deliveries to Europe have remained relatively stable this month, but replenishing inventories over the summer could prove challenging if disruptions persist and competition from Asia intensifies. EU gas storage currently stands just above 28%, well below the five‐year average of 41%.

Metals – Gold breaks below $4,100/oz

Gold extended its decline for a tenth consecutive session – its longest losing streak on record – with spot prices down more than 1% this morning. Silver fell more than 3% in early trading. Initial optimism after President Trump’s comments on potential Middle East progress quickly faded after Iran dismissed the prospect of talks and reports pointed to possible involvement from Gulf allies.

The conflict has added to inflationary risks, reinforcing expectations that interest rates could stay higher for longer, a headwind for non‐yielding assets such as gold.

Gold has now fallen every week since the conflict began on 28 February, as elevated energy prices and geopolitical risks are increasingly being offset by higher real yields and a firmer dollar. The recent weakness has also been exacerbated by forced selling, as investors liquidate gold positions to cover losses elsewhere in their portfolios rather than a deterioration in gold’s longer‐term fundamentals.

Near-term, risks for gold have increased. Ultimately, gold’s direction will depend less on geopolitical headlines alone and more on how those events shape inflation, monetary policy expectations and real interest rates. Read our latest on gold here.

Copper prices on the LME fell around 1% this morning, giving back part of Monday’s rally after President Trump announced a temporary pause in planned US strikes on Iran’s energy infrastructure. The renewed decline followed Tehran’s denial of any ongoing negotiations. Copper is down around 10% this month, though the pullback has attracted renewed Chinese buying. Mysteel data shows inventories fell by 78,700 tonnes last week to 486,200 tonnes – the largest weekly draw this year – highlighting improving physical offtake after the recent correction.

In ferrous markets, iron ore operations along Australia’s Northeast coast face potential disruption from cyclone Narelle. While the storm’s path remains uncertain, forecasts point to large swells along the Pilbara coast later this week, raising risks to key export ports and rail links. The region remains vulnerable after last year’s cyclones caused heavy rainfall, production disruptions and damage to export infrastructure.

Agriculture – Australia cuts wheat plantings amid fertiliser shortages

Australian growers are scaling back wheat plantings ahead of the winter season, pressured by weak prices, ample global supply and rising fertiliser costs. Wheat’s high nitrogen intensity has made input availability a key constraint, with disruptions to shipments through the Strait of Hormuz tightening global nutrient supplies and pushing prices higher. As a result, farmers are increasingly shifting acreage toward oilseeds and pulses, which require less fertiliser and currently offer better returns.

In oilseeds, reports suggest Chinese and Brazilian authorities have reached an agreement to ease soybean trade following a series of failed sanitary inspections. Brazilian shipments will no longer face a zero-tolerance requirement for weed presence, easing the risk of export bottlenecks as Brazil enters its peak shipping season. The move supports China’s efforts to diversify agricultural supply away from the US and comes as the planned late‐March Trump-Xi summit has been postponed to mid‐May.

In grains, Ukraine’s Agriculture Ministry reports that grain and legume exports in 2025/26 totalled 24.8mt as of 23 March, down 23% year‐on‐year. Corn shipments fell 19% YoY to 13.5mt, while wheat exports declined 26% YoY to 9.56mt, reflecting ongoing Russian strikes on Black Sea ports. While peace talks last month failed to deliver progress, upcoming negotiations could help stabilise sentiment and support a gradual recovery in exports.

Elsewhere, weather conditions remain broadly supportive for cocoa production in Ghana, Cameroon and Nigeria, where sufficient rainfall is aiding flowering and pod development. In contrast, seasonal harmattan conditions continue to weigh on crops in the Ivory Coast.

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