HSBC Chief Economist Paul Bloxham warned that escalating conflicts in the Middle East have disrupted multiple critical trade routes—including the Strait of Hormuz, the Bab el-Mandeb Strait, and the Black Sea—posing a systemic supply shock to global commodity markets. Brent crude briefly surpassed $100 per barrel, while prices for natural gas, wheat, and fertilizers rose across the board. Institutions such as Goldman Sachs have revised their forecasts upward, warning that Brent could exceed $120 per barrel. Against a backdrop of diminishing inventory buffers, markets face heightened risk of nonlinear price spikes, and supply chain pressures remain far from peaking.
With critical maritime chokepoints repeatedly disrupted, global commodity markets are facing a new wave of supply shocks.
Paul Bloxham, Chief Economist at HSBC, warned on Friday that as Middle Eastern conflicts continue to escalate, global commodity markets have re-entered a supply-driven phase. Shipments through the Strait of Hormuz have nearly come to a halt, shipping through the Bab el-Mandeb Strait remains persistently disrupted, and the situation in the Black Sea has deteriorated again—placing simultaneous pressure on multiple key global trade routes and rapidly intensifying supply chain risks for energy, agricultural commodities, and chemical products.
Driven by supply concerns, international commodity prices have recently strengthened across the board. Brent crude oil briefly surpassed USD 100 per barrel, European and Asian natural gas prices surged by over 40% in a single month, wheat prices climbed to a three-year high, and refined products such as diesel and jet fuel continued to rise.
Meanwhile, Wall Street institutions including Goldman Sachs, JPMorgan, and Royal Bank of Canada have recently revised their oil price forecasts upward, noting that prolonged shipping disruptions could push global commodity markets into a phase of even more pronounced price reassessment.
Chokepoint Crisis Spreads, Widening the Scope of Supply Shocks
According to industry monitoring data, maritime traffic through the Strait of Hormuz has nearly ceased, and geopolitical disruptions have quickly spread to the Bab el-Mandeb Strait—a strategic chokepoint for Saudi crude exports to Asia and for Eurasian trade passing through the Suez Canal. Simultaneously, naval hostilities between Russia and Ukraine in the Black Sea have intensified, disrupting multiple critical shipping lanes at once. Global commodity supply chains are now under systemic strain, and market concerns about the feasibility of alternative logistics routes continue to deepen.
The reason prices did not exhibit more severe volatility in recent months was largely due to proactive releases from strategic reserves, including drawdowns from the U.S. Strategic Petroleum Reserve. However, the effectiveness of this buffer is rapidly diminishing. As inventories continue to decline, fears of hitting critical thresholds are resurfacing, potentially triggering nonlinear price spikes. As economist Paul Bloxham noted, “The longer these disruptions persist, the higher the risk that commodity prices will surge sharply in a nonlinear fashion.”
Under acute supply shock conditions, commodity markets are becoming increasingly fragmented, evolving into disconnected regional pricing systems. Significant price divergences have emerged for the same commodity based on delivery location and timing, progressively eroding the relevance of traditional composite benchmarks. Bloxham further cautioned that inventory drawdowns offer only a limited hedging window; the current situation continues to worsen and is far from peaking.
Institutions Revise Forecasts Upward; Goldman Sachs Warns Brent Could Exceed USD 120
Multiple Wall Street institutions have recently issued heightened risk alerts for commodity markets.
Helima Croft, Global Head of Commodities Strategy at Royal Bank of Canada, explicitly stated that the current geopolitical conflict has entered a “dangerous phase,” with threats to Red Sea shipping and critical energy infrastructure expanding. Daan Struyven, a strategist at Goldman Sachs, further quantified the potential impact: if the crisis in the Strait of Hormuz persists, Brent crude prices could surpass $120 per barrel in the fourth quarter.
This expectation is already being validated in end markets. The national average price for regular gasoline in the United States has risen above $4 per gallon once again, breaching a threshold highly sensitive within the U.S. political system. Rising energy costs are transmitting from futures markets to consumers, creating tangible economic and political pressures.
However, the current shock extends well beyond energy. According to Bloxham’s report, urea prices have increased by 13%, wheat prices have reached a three-year high, and jet fuel and diesel prices are rising in tandem. Supply constraints are propagating through channels such as fertilizers, fuels, and grains, spreading ripple effects across agricultural commodity markets and imposing new cost pressures on global food supply chains.
Bloxham characterizes the current situation as a “super squeeze” and emphasizes that this trend is far from peaking. Against a backdrop of generally low inventory levels and simultaneous disruptions across multiple critical supply routes, the market’s capacity to absorb further price shocks has been significantly diminished.
Investors should remain alert to cross-commodity contagion risks—price transmission linkages are tightening across energy, agricultural products, industrial inputs, and consumer goods. The duration and intensity of this squeeze may hinge on geopolitical developments and the pace of policy responses, but a fragile configuration is already evident in the near term.
Editor/Stephen