The Commodities Feed: Middle East escalation pushes energy prices higher · THINK Economic and financial analysis

Key arguments

• Escalation between the US and Iran raises risks to regional oil supplies, especially through the Strait of Hormuz.
• Disruptions to Middle East and Russian diesel exports keep middle distillate cracks elevated and volatile.
• European gas prices climb as LNG recovery hopes fade with Persian Gulf tensions.
• Higher oil prices stoke inflation fears, reducing prospects for near-term Fed easing and pressuring gold.
• Soybeans benefit from US biofuel policy support and Midwest weather risks, alongside strong Chinese demand.

Corresponding source evidence

1. Escalation in the Persian Gulf pushes back hopes of any recovery in LNG exports from the region.
2. But as we move closer to the Northern Hemisphere winter, competition between the two regions is likely to pick up, particularly if Qatari LNG remains largely absent from the market through year-end.
3. Rising energy costs could add to inflationary pressures and reduce the scope for near-term Federal Reserve easing, weighing on non-yielding assets such as gold. · near-term