Oil Surges 25% to Highest Since 2022 Amid Iran War, Driving Vegoils and Aluminium Prices
Oil prices surged nearly 25% on Monday, reaching their highest levels since mid-2022, with Brent crude on track for a record one day gain.
In contrast, gold fell 2% as the escalating Iran conflict disrupted global energy supplies, strengthened the dollar, and dampened expectations of near-term interest rate cuts.
Agricultural markets, led by edible oils, rose in tandem with crude prices due to their use in biofuel production.
Meanwhile, aluminium climbed on supply concerns, even as other metals faced pressure from a stronger U.S. dollar.
“The violent reaction stems from markets seeing no clear off-ramp in the escalating Middle East conflict, a high-stakes standoff where neither side appears willing to blink first,” said Tony Sycamore, market analyst at IG. “The risk of more lasting economic damage continues to build by the day.”
Iran on Monday appointed Mojtaba Khamenei to succeed his father Ali Khamenei as Supreme Leader, signaling that hardliners remain firmly in control in Tehran, one week into the confrontation with the United States and Israel.
Soaring Oil Lifts Vegoils and Grains
Brent crude futures hit a high of $119.50 per barrel, while U.S. West Texas Intermediate (WTI) rose to $119.48, as the conflict prompted cuts in supply from key Middle Eastern producers and fears of prolonged disruptions through the Strait of Hormuz.
“The situation appears to be deteriorating further,” analysts at ING noted. “Upstream oil production is being shut in, with storage constraints emerging. Iraq, Kuwait, and the UAE have started reducing output.”
Agricultural markets followed oil’s rally. Malaysian palm oil rose 9%, and Chicago soybean oil climbed to its highest level since late 2022. Wheat reached its highest since June 2024, while corn prices hit a 10-month high, supported by surging energy costs.
Meanwhile, gold dropped more than 2%, pressured by a stronger dollar and rising inflation expectations from higher energy prices.
The U.S. dollar remained near a three-month high, making bullion more expensive for holders of other currencies.
Aluminium Soars on Supply Concerns
Aluminium jumped to a four-year high as supply fears intensified amid Middle East tensions. Three month aluminium on the London Metal Exchange reached $3,544 per ton, its highest since March 2022.
Qatari smelter Qatalum and Aluminium Bahrain have already declared force majeure on shipments due to rising geopolitical risks.
Other base metals were pressured by the strengthening dollar, which weighed on prices despite ongoing supply concerns.
The Iran conflict is now driving volatility across energy, agriculture, and metals markets, highlighting the interconnected impact of geopolitical risk on global commodities.
