The oil market is repricing expectations with little sign of progress in finding a resolution in the Persian Gulf.
Hopes for a resolution between the US and Iran are fading as peace talks stall. In addition, Iran's seizure of two vessels attempting to transit the Strait of Hormuz suggests disruptions to shipments are set to continue. The market is having to reprice expectations. This saw Brent break convincingly back above $100/bbl. As hopes fade, the reality of the supply disruption will set in, leaving further upside for prices. If no progress is made, the market will become increasingly numb to the noise and headlines that have dictated price action recently.
Meanwhile, we continue to see growing demand destruction in the oil market, a trend that will intensify as Persian Gulf supply disruptions persist. Airlines continue to announce flight cancellations amid a tightening in jet fuel supply and significant price strength. Europe's jet fuel market is heavily exposed to developments in the Middle East. The region sources the majority of its jet fuel imports from the Persian Gulf. There is a push for Europe to look elsewhere for alternative supplies while also relying heavily on inventory. Jet fuel inventory in the ARA region has been declining rapidly in recent weeks, reaching its lowest levels since the Covid era.
Meanwhile, Energy Information Administration data continue to show that the US is exporting record amounts of oil and refined products as buyers around the globe seek alternative supplies. Total oil and refined product exports over the last reporting week increased by 137k b/d to 12.88m b/d. The recent increase in exports has been driven predominantly by refined products, with flows rising by 564k b/d week-on-week to break above 8m b/d for the first time. Although the US market has been relatively shielded from Middle East supply disruptions, prolonged instability tightens conditions as global buyers increasingly turn to US supplies.
US commercial crude oil inventories increased by 1.93m barrels over the last week. After taking into account SPR releases, total crude oil inventories fell by 2.21m barrels. Given stronger refined product exports, gasoline and distillate fuel oil stocks fell by 4.57m barrels and 3.43m barrels, respectively. Meanwhile, implied demand for refined products came under pressure over the last week, falling by 1.07m b/d WoW. The move was dominated by a decline in fuel oil and propane demand.
In gas markets, investment funds continued to reduce their net long in TTF over the last reporting week on the back of hopes of a resolution in the Middle East. Funds sold 11.5TWh over the week, leaving them with a net long of 260.2TWh. However, with hopes of a quick resolution fading, this fund selling is likely to ease.
Copper and aluminium edged higher yesterday after US President Donald Trump extended the Iran ceasefire indefinitely, reducing near-term geopolitical risk. However, the Strait of Hormuz remains closed, with Tehran signalling it will not reopen the route while the US blockade persists.
Signals across the metals complex remain mixed. Demand is still under pressure as elevated energy costs weigh on global growth. Aluminium has found support from supply disruptions in the Middle East, which accounts for around 9% of global output. Copper supply faces growing risks amid potential sulphuric acid shortages due to shipping disruptions and China's planned export suspension from May.
In other base metals, nickel fundamentals are getting tighter. The International Nickel Study Group estimates the market will swing to a 32kt deficit in 2026, from a surplus of 283kt in 2025, reflecting Indonesia's production quotas and broader fallout from Middle East disruptions. Global output is forecast to fall 4.3% year-on-year to 3.72mt in 2026, while consumption is seen rising to 3.75mt, from 3.6mt this year.
In precious metals, gold and silver rebounded after two sessions of losses, supported by a weaker dollar and easing geopolitical tensions. Gold ETF flows have turned positive over the past three weeks. This points to renewed investor interest following the March sell-off. Holdings rose by 10koz on 21 April, marking a sixth consecutive daily inflow and lifting total holdings to 99.3 moz.
Arabica coffee futures rose sharply yesterday. It gained almost 5%, amid persistent Middle East tensions that continue to threaten logistics costs, while exchange‑monitored inventories remain tight. Although the ceasefire has been extended, there is little indication that the Strait of Hormuz will reopen, keeping freight risks elevated. Prices also remain highly exposed to fuel costs, given the long inland transport routes from farms to export ports. ICE‑monitored US port inventories fell for a fifth consecutive session to 518.5k bags as of 21 April. This is reinforcing supply concerns. While Brazil's upcoming arabica harvest next month may ease availability, near‑term export flows remain constrained by lower stocks and a firmer Brazilian real.
Russia has extended its fertiliser export quota to 20mt for the June-November 2026 period, amid tightening global supply linked to the Iran conflict and shipping disruptions in the Strait of Hormuz. The revised cap includes 8.7mt of nitrogen fertilisers, over 4.2mt of ammonium nitrate, and roughly 7mt of complex fertilisers. As the world's second‑largest fertiliser producer, supplying around 20% of global trade, Russia continues to prioritise domestic needs following an existing 18.7mt quota in place through end‑May.
The effective closure of the Strait has restricted roughly one‑third of global seaborne fertiliser flows, intensifying concerns over food security. While importers seek alternative sources, export restrictions from major producers, including China and Russia, have further tightened availability and driven prices sharply higher. India, the world's largest urea importer, has been forced to pay significant premiums, agreeing to purchases at prices nearly 90% above its previous tender levels.