Commodities rally broadens in April as Middle East disruption tightens global supply chains

Energy remains tight, but headline risk creates sharp reversals

Brent crude remains elevated after touching a fresh wartime high late in April, supported by worsening physical tightness and rising concern about outright shortages in some regions. The near closure of the Strait of Hormuz continues to prolong a disruption that is steadily tightening global energy markets, with flows through one of the world’s most important oil arteries still severely restricted. Limited signs of a US-Iran breakthrough have only reinforced that view, with Washington doubling down on its blockade while Iran’s new supreme leader, Mojtaba Khamenei, cast doubt on the prospect of a deal, vowing not to abandon the country’s nuclear or missile ambitions while signalling Tehran intends to maintain control over the Strait.

The market is also no longer pricing the disruption as a short-lived front-month squeeze. While the 2026 Brent annual average rose 10% in April, the bigger move occurred further out the curve, with the 2027 average price rising 25% and 2028 climbing 16%, reflecting expectations of a prolonged supply shock driven by damaged Middle East infrastructure, reduced production capacity, and the eventual need to rebuild depleted commercial and strategic reserves. Yet while fundamentals remain supportive, trading conditions have become exceptionally difficult. Physical tightness continues to grind prices higher, but any credible easing headline could still trigger violent downside corrections.

Wheat emerges as a potential inflation story

Agriculture also played a bigger role in April’s advance, with wheat standing out as drought and fertiliser concerns combined to tighten supply expectations. Chicago wheat futures moved towards a third straight weekly gain despite some profit-taking after surging to the highest level in nearly two years, briefly trading above USD 6.77 per bushel and lifting the year-to-date gain to 28%. Drought across key US growing regions is pressuring yields at a time when soaring fertiliser costs have helped drive US wheat plantings to the lowest level since record-keeping began in 1919. In addition and besides fertiliser, higher energy costs are lifting diesel and freight prices, feeding directly into global crop production costs and ultimately food price inflation.

Copper rebounds as scarcity themes return

Copper staged a notable rebound in April, helped by improving physical demand signals and renewed focus on supply-chain vulnerability. Chinese metal fabricators restocking helped drive a halving in the SHFE monitored stock piles in just six weeks. In addition, concerns around sulphuric acid supply from the Middle East, a critical input for metal processing, especially in Chile and Peru, two global production titans, all helped reinforce tightening nearby availability.

Surging fossil fuel prices and growing energy security concerns have sharpened the global focus on alternatives, accelerating investment in renewables, grid infrastructure, battery storage and power generation capacity. At the same time, rising electricity demand from AI, electrification and data centres is adding to the need for a major expansion in generation, transmission and storage. Together, these developments continue to point to structurally higher future demand for copper, the backbone conductor of the energy transition, whether in power grids, electric vehicles, battery systems or renewable generation.

Gold steadies as policy and currency shifts come into focus

Gold ended the month little changed, but late-April price action pointed to emerging resilience. Following the FOMC meeting, bullion rallied despite Brent crude surging to a fresh wartime high and Treasury yields moving higher after three dissenting members pushed to remove the easing bias from the policy statement, a notably hawkish signal.

Gold’s ability to rise in the face of what would normally be clear headwinds suggests the market is increasingly looking beyond near-term inflation fears toward broader risks to growth, financial stability and geopolitical uncertainty. In addition, renewed yen strength following Bank of Japan intervention may tighten financial conditions globally through carry trade unwinds, a development that could further support defensive assets such as gold.

Silver also stabilised in April following March’s 19% slump, a correction that helped remove excess froth after an extended rally driven by tight physical supply, booming photovoltaic demand and speculative enthusiasm. While higher oil prices, a stronger dollar and rising yields created a difficult macro backdrop, the long-term outlook remains supported by a sixth consecutive annual market deficit, shrinking above-ground inventories and firm demand from solar and private investors. In short, silver remains the higher-beta precious metal, offering greater upside potential than gold, but with a bumpier ride along the way.

Outlook: broader strength, rising volatility

April confirmed that commodities are no longer being driven by a narrow energy rally. The advance is broadening across sectors as the consequences of disrupted trade routes, higher input costs and tighter physical availability ripple through the global economy.

For now, supply stress remains the dominant force. But markets are increasingly priced for prolonged disruption, leaving them vulnerable to sharp reversals on any sudden easing headline.