Counterintuitively, gold prices have fallen despite escalating geopolitical conflict. This is not due to a change in its safe-haven status, but because of forced selling pressure from a deleveraging event in equity markets. This has created a temporary, stronger correlation between gold and risk assets.
If the Strait of Hormuz remains closed, OECD commercial crude inventories are projected to reach their operational floor by early May. At this point, the system loses functionality, and physical stock buffers cease to be the balancing mechanism. Instead, demand will be forcibly rationed through dramatic price increases.
Despite international gas prices soaring 60% due to conflict, US Henry Hub prices remain flat. This is because the global coal market is healthier than during the 2022 energy shock, weakening the transmission channel that previously linked the two gas benchmarks through coal-to-gas switching.
Recent attacks on aluminum plants are uniquely damaging. A sudden power loss causes infrastructure to freeze, necessitating a year-long restart process. With inventories already low, this prolonged outage of 4% of global supply could trigger a severe deficit and push prices past $4,000 per ton.