Commodity Watch — 2026-10-25

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Middle East Conflict Drives Energy Prices to Multi-Year Highs

The ongoing war in the Middle East has sent a severe shock through global commodity markets, with energy prices projected to surge by 24% this year to their highest level since Russia’s invasion of Ukraine in 2022. The geopolitical conflict is increasingly weighing on the global consumer, pushing prices toward record highs before expected easing through 2027.

Crowded Trades Unwind Amid Risk-Off Sentiment

Commodity markets are facing broad risk-off sentiment and position unwinding as energy prices surge. Meanwhile, gold and silver are retreating, and copper faces uncertainty due to tariff concerns, shifting the landscape for investors who previously held crowded positions in these sectors.

Agricultural Commodities Outshine Industrial Metals

Amidst the broader market volatility, agricultural commodities such as wheat and soybeans are outshining industrial metals like copper. This divergence highlights a rotation into agricultural assets, potentially driven by supply concerns or specific sector demand dynamics.

Energy Markets

The energy sector is experiencing significant upward pressure due to geopolitical instability and supply constraints. As of the October 23, 2026 market close, WTI crude traded at $103.27 per barrel, marking a daily increase of $3.80, while Brent crude was trading at $116.63 per barrel. This surge aligns with the U.S. Energy Information Administration's (EIA) revised Short-Term Energy Outlook, which raised its global oil price forecast significantly. The EIA now forecasts the Brent crude oil spot price to average $105 per barrel in the fourth quarter of 2026, a $14 increase from the previous month's forecast.

Supply and demand dynamics are further influenced by inventory tightness. U.S. commercial crude inventories fell by 3.1 million barrels last week to 412.5 million barrels, according to EIA data for the week ending October 16, 2026. This drawdown in inventories supports the bullish trend in crude oil. Additionally, tightness in diesel markets is raising demand for crude oil as refiners work to meet diesel demand. Natural gas futures were trading at $3.05 per MMBtu, while gasoline futures stood at $3.13 per gallon as of October 23.

1 sources

eia.gov

eia.gov

Precious Metals & Industrial

The precious metals sector is currently undergoing a correction as crowded trades unwind and energy risks intensify. Gold and silver are retreating, reflecting a shift in market sentiment where investors are reducing exposure to these assets. This movement is occurring alongside a broader risk-off environment in commodities, where energy prices are surging and drawing capital away from traditional safe havens.

In the industrial metals category, copper is facing significant uncertainty, particularly due to tariff concerns. The daily chart pivot point for copper futures is at 6.449, with a maximum support and resistance range of 6.1565–6.6965 cents per pound. Despite these pressures, agricultural commodities like wheat are showing relative strength. The CBOT Wheat pivot point is at 625.9, indicating a different trajectory compared to the struggling industrial metals.

Agriculture

Agricultural markets are currently displaying resilience and outperformance relative to other commodity sectors. Wheat and soybeans are specifically noted as "hidden gems" outshining copper, suggesting strong underlying demand or supply-side tightening in the agricultural complex. The CBOT Wheat futures show a pivot point at 625.9, indicating active trading levels that are holding up well against the backdrop of broader market volatility.

What to Watch

• Middle East Geopolitical Developments: Any escalation or de-escalation in the ongoing conflict will directly impact energy prices, which are currently projected to surge by 24% this year.
• EIA Inventory Data: Continued monitoring of U.S. commercial crude inventories is crucial, as recent draws of 3.1 million barrels have supported bullish price action.
• EIA Short-Term Energy Outlook Updates: Analysts will watch for further revisions to the Brent crude forecast, currently pegged at $105/bbl for Q4 2026, and $84/bbl for next year.
• Tariff Policy on Industrial Metals: Copper prices remain sensitive to tariff uncertainty, which could trigger further volatility in the industrial metals sector.