The Bloomberg Commodity Total Return Index is heading for another strong weekly gain, rising around 4% and lifting its year-to-date advance to 25%. As has been the case since the escalation of the Middle East conflict, energy remains the dominant driver, but the composition of gains continues to evolve. While crude oil prices have extended higher, before pausing on news talks in Islamabad may resume, the most pronounced strength is increasingly found further down the value chain, notably in refined fuels such as diesel and jet fuel, as well as petrochemical feedstocks and fertilizers.

This highlights a key development in recent weeks: what began as a crude oil supply shock linked to the effective closure of the Strait of Hormuz has now broadened into a multi-commodity disruption. The implications are no longer confined to energy markets alone but are spreading into industrial production, transportation, and ultimately agriculture and food prices.

Precious metals traded lower, led by silver and platinum, while gold remained rangebound between USD 4,650 and 4,850, with rising oil prices influencing the dollar and inflation expectations. Industrial metals were mixed: aluminium and nickel found support from Persian Gulf and Indonesian export restrictions, while copper’s recent rebound – partly driven by sulfuric acid shortages among miners – appears to be losing momentum ahead of key resistance around USD 6.15 per pound.

From crude to products: where the real stress is building

Brent and WTI crude both posted solid weekly gains, rising 14% and 12% respectively, leaving them around 80% higher year-to-date. However, these headline moves continue to understate the severity of the physical market tightness.

Instead, the clearest signs of stress are found in middle distillates. Gas oil (diesel) surged 15% on the week and is now up 110% year-to-date, while NY ULSD climbed 14% and has more than doubled this year. Gasoline has also rallied strongly, but to a lesser extent, reflecting a combination of seasonal demand and availability of supply from gasoline-rich refinery activity in the US.

The divergence between crude and refined products reflects a structural bottleneck. While crude supply has been severely disrupted by the near shutdown of Hormuz flows, the ability to process and distribute refined fuels has been even more constrained. Refinery outages, limited spare capacity, and logistical disruptions have all contributed to a situation where the availability of usable fuels – not crude itself – is becoming the primary concern.

This is increasingly visible across the global economy. Airlines are cutting capacity, industrial users are curbing demand, and governments are drawing on reserves or implementing demand measures, particularly across Asia and parts of Europe.

A multi-commodity shock emerges

The Strait of Hormuz is often described as the world’s most important oil chokepoint, but its significance extends far beyond crude. It is a critical transit route not only for oil and LNG, but also for refined fuels, petrochemicals, aluminium, and a gas-dependent fertilizer industry, including ammonia and urea. In addition, the disruption is impacting around 50% of global seaborne sulfuric acid supply – often referred to as the “universal chemical” due to its role as a foundational input in fertilizer production, mining and metal extraction, as well as a wide range of industrial and high-tech manufacturing processes. In response to the shortage and rising domestic prices, China – the world’s largest exporter – announced a total ban on sulfuric acid exports effective May 1, 2026. This raises concerns that other producers of commodities in tight supply may follow suit, curbing exports to protect domestic industries and prices.

As a result, the disruption has triggered a second-round supply shock, with reduced petrochemical availability impacting industrial production and fertilizer shortages raising concerns about crop yields later this year. This dynamic is already visible in agricultural markets, not least across the grains complex. Soybean oil, a key biofuel feedstock, has rallied strongly, up 48% year-to-date, supported by both energy linkages and tightening supply expectations. Wheat, one of the most fertilizer-intensive crops, has been underpinned by ongoing drought concerns across the U.S. winter wheat belt, with reduced fertilizer availability adding to the risk of lower summer production. Elsewhere, sugar has struggled to sustain gains despite its ethanol link, weighed down by ample near-term supply, while cotton has found support from US drought concerns and its linkage to energy through synthetic fibre.

Demand destruction: the market’s balancing mechanism

Despite the severity of the disruption, crude prices have been partly capped by growing evidence of demand destruction. Higher prices and shortages have already reduced consumption, with demand destruction estimated at 4 to 5 million barrels per day, or around 5% of global demand, mainly impacting Asia.

China, the world’s largest importer of crude oil, has played a particularly important role in stabilising the market. Rather than aggressively competing for limited seaborne supply, Chinese buyers have reduced imports and drawn on extensive strategic and commercial inventories. At the same time, there are indications that China has resold cargoes into the international market, helping to ease immediate supply pressures.

This combination of demand destruction and inventory drawdowns has helped cap crude prices, even as the physical market for refined products continues to tighten.

Why reopening Hormuz will not mean normalisation

The key question is what happens next. Even a full reopening of the Strait would not lead to an immediate return to normal conditions. The disruption has created a complex logistical challenge that will take time to resolve. Tankers carrying crude, refined products and LNG are currently stranded, delayed, or positioned in the wrong locations. Clearing this backlog will take weeks, as vessels are sequenced through ports that are themselves operating under constrained conditions.

Beyond shipping, regional refining capacity remains uncertain, with reported damage and disruptions likely to constrain output of key fuels such as diesel and jet fuel. Storage presents another bottleneck, as tanks may be near capacity after prolonged export disruptions, delaying any meaningful production restart.

Finally, restarting production is not instantaneous. Oil and gas wells that have been shut in require careful management to bring back online, and in some cases, this can take weeks or longer. The combined effect of these factors is that normalisation will be measured in months, not days.

In the meantime, the loss of supply during the disruption – potentially approaching one billion barrels before normalisation – will continue to be felt through lower global inventories, effectively raising the floor for how far oil prices may fall once the initial reopening-driven flush has run its course.

Clean energy: a revival driven by necessity

Against this backdrop, the clean energy sector has staged a notable recovery. The iShares Global Clean Energy ETF is up more than 20% year-to-date, marking a significant turnaround following a prolonged slump between 2021 and 2025.

The resurgence reflects a convergence of supportive factors, not least renewed focus on energy security following the current crisis. At the same time, lower solar input costs have improved project economics and supported new investment. In addition, rising electricity demand from AI and data centres is supporting investment in generation and storage.

Within the sector, the performance has been led by companies exposed to grid infrastructure, battery storage and utility-scale solar, often described as the “picks and shovels” of the energy transition. Hydrogen and fuel cell companies have also seen renewed interest, albeit with continued volatility.

US natural gas: an outlier in a tight energy complex

While global energy markets remain under strain, US natural gas continues to trade to a different tune. Prices tumbled this week after a six-day rally, with the May contract falling to near an 18-month low at $2.55 following a larger-than-expected storage build lifted US stockpiles to 2,063 bcf, which is 7.1% above the five-year average. The build reinforced concerns about oversupply, driven by mild weather conditions and relatively weak seasonal demand.

This divergence highlights the regional nature of gas markets, with the US remaining relatively insulated due to strong domestic supply. At the same time, lower prices are beginning to trigger a supply response, with drillers curbing activity. However, for now, the market remains well supplied, in contrast to the tightness seen in oil and refined products.

Agriculture: fertilizer shortages meet weather risks

Agriculture is emerging as a key area of focus, with risks continuing to build. The disruption to fertilizer supply is a major concern. The Persian Gulf region accounts for a significant share of global exports of nitrogen-based fertilizers, and any prolonged disruption could reduce availability and increase costs for farmers worldwide. T...

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