Commodity Markets in Turmoil: Oil Swings Wildly, Gold Hits Record Highs Amid Gulf Crisis
Commodity prices are showing high volatility. Brent crude fell below $95 on hopes of a deal with Iran, then surged past $101 after news of its collapse. Gold rose above $4,760 per ounce amid a weaker dollar and geopolitical risks.
Commodity markets now resemble a powerful oscillating circuit, where every new headline from the geopolitical sphere triggers a resonant price jump. Brent crude swings wildly in a range from $95 to $105, gold updates records above $4,700, and traders are mass-buying call options to hedge against further escalation. But beneath this chaos lies cold calculation: we are witnessing not spontaneous panic, but a fundamental revaluation of rare earth and energy assets amid a prolonged supply shock.
The Core: What Is Really Happening
What the mass media calls "volatility" is actually a mechanism of forced price discovery amid disrupted global supply chains. The Strait of Hormuz, through which about 20% of the world's oil and gas normally passes, has been effectively paralyzed for 11 weeks. The blockade is not total but selective: insurance premiums have soared to prohibitive levels, physically halting tanker traffic. The market's reaction to news of US-Iran talks is not just emotion, but an instant calculation of the probability of roughly 20 million barrels per day of oil flows returning to the market.
That is why Donald Trump's words, calling Iran's response "a piece of trash" and putting the truce on a "massive life support system," instantly sent Brent up 4.3%. The "talks/collapse" seesaw has become the main driver of short-term moves, but behind it lies a deeper structural shift. The era of cheap and stable energy is over. The market is fragmenting: Asian consumers overpay for LNG, Europeans for diesel, and the US compensates for the deficit with its own shale supplies at higher prices.
Timeline and Context
Reconstructing the chain of events makes it clear that the commodity market is pricing in a protracted war of attrition:
- February 28, 2026: Active phase of the conflict begins. Brent crude makes its first sharp jump, routes through the Strait of Hormuz are blocked.
- March: Oil prices consolidate in the $100-$120 per barrel range. Physical oil supply on the spot market contracts sharply.
- April: Markets split. Oil rises 14% for the month due to supply stoppages, while gold corrects slightly lower amid a stronger dollar and rising Treasury yields.
- First week of May: Rumors of progress in Pakistan talks emerge. Brent briefly falls below the psychological $95 per barrel mark.
- May 10-11: Trump flatly rejects Iran's 14-point "peace plan," calling its demands for sanctions relief and reparations "totally unacceptable." Brent jumps back to $105.44 per barrel, WTI to $99.47.
- May 12: Gold updates records, reaching $4,760 per ounce. Investors take profits in stocks and shift into physical assets amid fears of stagflation.
Who Wins and Who Loses
Winners:
- US shale oil producers. With Brent above $100 per barrel, their margins are record-high. They are actively increasing drilling and capturing market share lost by Middle Eastern suppliers. US LNG exports also hit records, replacing Qatari volumes.
- Holders of physical gold. Spot gold consolidates above $4,700 per ounce. With the Fed unable to aggressively raise rates due to recession risk, and inflation driven by expensive oil, real yields are deeply negative. This is an ideal environment for a precious metals rally.
- Volatility traders. Hedge funds betting on a rise in the oil volatility index (OVX) reap super-profits from sharp moves of $10-15 per barrel in a single trading session.
Losers:
- Asian refineries. Shortage of sour crude from the Middle East and soaring LNG prices make refining unprofitable, causing a cascade of capacity shutdowns.
- Global consumers. US gasoline prices hit multi-year highs. Inflation expectations rise, undermining consumer confidence and forcing households to cut spending on durable goods.
- European aluminum and zinc producers. Energy-intensive production halts due to high electricity costs. Damages run into hundreds of millions of USD in lost revenue.
What the Media Isn't Saying
The main non-obvious insight concerns not oil itself, but the fertilizer and industrial chemicals market. The conflict has halted not only crude oil tankers but also shipments of sulfur, a byproduct of oil refining and a key component for producing sulfuric acid. The shutdown of refineries in the Gulf has led to an acute sulfur shortage.
Sulfuric acid is critical for leaching copper and nickel from ore. Westpac is already sounding the alarm: the sulfuric acid shortage is becoming a physical constraint on ramping up production of metals needed for the "green transition." We are seeing a unique situation: the Middle East war, through the sulfur crisis, is slowing copper production, boosting metal prices in the long term more strongly than a direct export ban. This is the "second derivative" that mainstream media miss by focusing solely on the price per barrel.
Forecast: Next 30 Days and 90 Days
Next 30 days (until June 11, 2026):
Brent crude will remain in the $100-$115 per barrel range. Expectations of a Trump-Xi summit will curb further runaway growth, as the market hopes for Chinese pressure on Iran. However, the fundamental situation will remain critical: storage inventories will begin to approach operational minimums. Gold will test the $4,850 per ounce level on the back of US inflation data, expected to show a rise above 3.5%. Industrial metals, especially copper, will start to price in a premium for the sulfuric acid shortage.
Next 90 days (until mid-August 2026):
Westpac's forecast assumes flows through the Strait of Hormuz will return to only 10-15% of pre-crisis levels by the end of June. This means that in the third quarter, the world will face a full-scale energy famine. If no diplomatic solution is found by August, Brent will move above $120 per barrel. The LNG market is in turmoil: Japanese consumers are already paying over $22.5 per MMBtu, and this is not the limit. In this scenario, gold moves above $5,000 per ounce as central banks of developing countries begin a frantic diversification of reserves from the dollar into physical metal. But the main beneficiary will not be gold, but shares of sulfuric acid producers and US LNG exporters, which will become the "new oil" of this crisis.
— Editorial Team
