13th June 2025
Geopolitical tensions took centre stage this week across global commodity markets, following a dramatic escalation in the Middle East. On Friday, Israel launched a wave of airstrikes targeting Iranian nuclear facilities and senior military leaders, prompting fears of a broader regional conflict. Given that the Persian Gulf supplies over 20% of the world’s oil, markets reacted sharply across the energy and metals sectors.
Coal
Tensions between Israel and Iran took centre stage today, driving significant volatility in oil and gas markets. Prices surged, with both ending the day approximately 4–5% higher. Brent crude spiked as much as 12% overnight before pulling back, as uncertainty over the potential impact on oil supply fuelled the rally. The bullish sentiment also spilled over into the coal swaps market, although the impact there was more subdued compared to other parts of the energy complex.
Brent Crude Surges on Middle East Escalation
Brent crude prices jumped 6.72% to $74.02 per barrel after Israel’s strikes raised the spectre of a wider conflict that could disrupt oil flows from the region. The market is now pricing in an elevated geopolitical risk premium, with traders watching closely for any signs of Iranian retaliation or further escalation in the Gulf. This marks a stark reversal from recent weeks where oil had traded in a relatively narrow band amid subdued demand data.
European Gas Prices Climb Amid Energy Security Fears
European natural gas futures (Dutch TTF) also spiked, rising 4.80% to €38.15/MWh, hitting their highest level since early April. The surge reflects not just the geopolitical shock, but also localised supply concerns. Wind generation in northwestern Europe is expected to dip heading into the weekend, while in France, worries have resurfaced over nuclear output after signs of stress corrosion were detected in at least one reactor. Add in unseasonably hot weather driving air conditioning use, and the short-term outlook for gas remains volatile.
Iron Ore Weakens on Supply Pressure and Seasonal Demand Dip
In China, imported iron ore prices moved within a narrow but weakening range, influenced by growing port inventories and weakening macro sentiment. The market is also digesting the latest round of US-China trade rhetoric, which saw tariff expectations turn bearish after unproductive London-based negotiations. On the supply side, global shipments increased modestly, adding pressure, while pig iron production declined and the start of the rainy season dampened construction activity. The SGX July contract for 62% Fe fines edged down 0.70% to $93.55/mt.
Copper Retreats Below $9,600 on Risk-Off Mood
Copper prices were also caught in the broader selloff, with LME 3-month copper falling 1.26% to $9,575/mt. Beyond the geopolitical tension, investor sentiment was weighed down by renewed tariff threats from US President Donald Trump, casting a shadow over the global demand outlook. While copper remains supported by long-term structural trends, the short-term mood has turned cautious.
Chrome Prices Drift Lower Amid Softening Sentiment
The chrome market saw prices soften again this week, with Fastmarkets reporting a $10 drop in South African UG2/MG ore to $284/tonne (cif China). Liquidity remains thin, and buyer appetite is limited, mostly restricted to just-in-time procurement. Chinese port inventories rose to 2.78–2.96 million tonnes as of June 9, up from the prior week, driven in part by ongoing smelter shutdowns in South Africa, including Merafe Resources’ Lion smelter. Although the market remains well above its 2024 lows, sellers attribute the current decline more to sentiment than fundamentals. Some expect further builds in inventory, even as production and downstream stainless steel demand stay subdued in the seasonal off-peak.
As the dust settles from Friday’s events, commodity markets are bracing for heightened volatility. Whether this week’s price moves mark the start of a new trend or a short-term geopolitical reaction will depend on developments in both diplomacy and demand in the weeks ahead.
