Global Commodities: A Perfect Storm

The latest JPMorgan At Any Rate episode highlights a modest rebound in oil shipments through the Strait of Hormuz, climbing to roughly 5.1 million barrels per day in June—still only a quarter of pre‑conflict volumes. At the same time, demand destruction has intensified, now twice the level seen during the 2009 financial crisis, especially in Southeast Asia, Africa and China. Heavy inventory draws have cushioned price pressure, but models still project Brent hovering around $100 per barrel for the rest of 2026. The rebound also eases the oil side of the ledger but remains insufficient.

On the gas side, LNG movements through the Hormuz corridor remain negligible—about five percent of pre‑war volumes—leaving European markets exposed to a perfect storm. Northwest Europe’s TTF storage sits at just 33 percent of capacity, far below the seasonal average of 60 percent, while spot prices trade around €47–50, roughly $52‑$55. The seasonal cooling demand surge in Asia, amplified by El Niño, coincides with waning incremental supply from the United States and Austria, tightening the forward curve and supporting higher summer prices. Consequently, traders are pricing in a premium for summer deliveries.

With storage deficits tightening, policymakers face mounting pressure. Germany, home to the continent’s largest gas vaults, already lowered its domestic storage target from 90 percent to 70 percent last year, and further relaxations now appear unlikely. The risk of emergency subsidies or regulatory tweaks is rising as winter approaches and inventories linger near 33 percent. JPMorgan’s commodity team warns that both oil and gas forward curves are underpricing these supply‑side shocks, suggesting that spot prices will need to stay above current levels to replenish stocks and stabilize markets. Investors should monitor regulatory signals and storage reports for early warnings.